Federal Budget 2013: No Budget joy for property market

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THE property sector has once again missed out on Budget love with little direct relief for home buyers, sellers and investors.

The Budget’s housing centrepiece is a $112 million trial program to assist the elderly to downsize their homes without affecting pensions, via a means test exemption of up to $200,000 for ten years.

It is designed to remove the disincentive for seniors to relocate to more age-appropriate housing, however, the program’s requirements that homeowners must have owned their family property for at least 25 years excludes many from receiving the benefit.

A $100 million investment in natural disaster mitigation aimed at lowering insurance premiums, and the Government’s ongoing financial commitments to address homelessness were also part of the Budget wash-up.

So not surprisingly his "Budget of Labor values", which delivered big spending cuts, largely ignored the ongoing weak property and construction industries.

And property experts say the days of federal Budget baubles such as the $21,000 First Home Owners Grant under the Rudd Government are a thing of the past, after sparking a destabilising jump in housing prices.

Meanwhile, construction industry groups expecting dedicated housing policy measures and supplyside reforms would also have been disappointed by tonight’s Budget.

Among key initiatives they called on were more incentives for potential buyers, housing infrastructure funding reform, support for building product manufacturers; support for trade training and job retention.

None of these made the Budget's agenda.

The HIA said the Budget was an opportunity - albeit a missed one - to reinvigorate new home building activity and alleviate the nation’s housing affordability pressures.

“New home starts are close to decade lows and housing renovations activity is at a similarly low level," HIA senior economist Shane Garrett said.

"Australian manufacturers who supply the home building industry are consequently facing weak demand conditions and are also squeezed by the strength of the Australian dollar.

"This reduced level of housing activity is all against the backdrop of strong population growth.”

“Any government will be very careful about reintroducing the First Home Owners Scheme again or boosting it unless these is a big economic shock and a risk of the housing market collapsing by 30 to 40 per cent,” Mr Kusher said.

Grants had artificially inflated house prices against a backdrop of rate cuts designed to bring the dollar into check and stimulate new home starts, he said.

“I think most people are expecting a change of government in September so I don’t know how much weight they will give to this Budget.”

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However, Mr Kusher said the deficit could send the wrong message to international property investors.

Lack of any policy change will come as welcome relief to local investors who were concerned they may be targeted by the Budget axe.

Key concerns for investors have been ongoing suggestions that negative gearing benefits could be scrapped and and capital gains tax increased.

Real estate groups have also lobbied for first-home buyers to access their superannuation to purchase a property but this remained unchanged in the Budget.

Despite the lack of direct federal support for housing there are some indirect benefits.

Infrastructure

The budget announced $24 billion in funding for roads, including highways and rail, to improve liveability and relieve congestion in our expanding cities.

Rental affordability

The budget included provisions for the government’s National Rental Affordability Scheme (NRAS), which supports investment in affordable rental housing, favouring projects supporting independent living for elderly and disabled Australians.

Superannuation

Superannuation reforms were announced, including the gradual increase of employer contributions from 9 to 12 per cent. The change to superannuation requirements may to see an increasing number of Australian’s utilise their nest egg to invest in property.

OVERALL WINNERS AND LOSERS IN THE FEDERAL BUDGET

WINNERS Farmers - Concessional government loans worth $420 million to help farmers restructure their debts Disabled - 0.5 per cent rise in 1.5 per cent Medicare levy to pay for national disability scheme, raising about $3.3 billion Schools - commonwealth funding of $9.4 billion over six years, annual education spending increase of 4.7 per cent Cancer patients - $29.7 million for chemotherapy treatments Defence - spending increases slightly to $113 billion over four years Indigenous - $777 million over three years towards a renewed national partnership agreement on indigenous health, which provides money for Close the Gap programs The aged - can sell their long-term homes and invest up to $200,000 without affecting their pensions Truckies - $4.1 billion over a decade for upgrade work on the ageing Bruce Highway in Queensland, including $1.7 billion already allocated Sydney drivers - Federal, NSW governments to stump up $400 million each to start building the $3 billion, eight-kilometre tunnel linking the F3 and M2 motorways in Sydney

LOSERS Federal Government - announcing an $18 billion deficit in an election year after promising a surplus last year Tax payers - deferral of second round tax cuts Families - Increase in Family Tax Benefit A worth total $1.8 billion for 2013/14 scrapped University students - changed payment structures for fees, scholarships and deductions to save the government more the $2.5 billion Public servants - $580 million of cuts to the public service over the forward estimates Big Business - crackdown on large company, multi-national tax minimisation schemes