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Federal budget 2020/21 and the expected impact on property

Federal budget 2020/21 and the expected impact on property

By Mathew Tiller on Oct 12 2020


The central premise of the 2020/21 is to steer the Australian economy through the current and future challenges stemming from the COVID pandemic.

Themes:
  • Create jobs by supporting industries such as manufacturing, and more major infrastructure projects.
  • Steer the Australian economy through one of the toughest periods in recent history.
  • Ensure businesses can continue to remain open, operate and hold-on to employees.
  • Give households more money to pay bills and mortgages, but also encourage them to spend which will in turn help retailers and the economy.
 
Income tax
Income tax cuts will provide households with more money in their back pocket to spend on everyday expenses. It will also support retailers as it will encourage households to spend more.
 
Real estate implications: This measure will help support mortgage holders, assist those who are saving for a deposit and help those looking to upgrade or purchase another property by increasing their borrowing capacity.
 
Job creation
With businesses under pressure from forced shutdowns, restrictions and additional regulations, the government will focus as much as possible on job creation. This includes spending more on new apprenticeships, providing wage subsidies for employers to take on more young job seekers and supporting industry, such as manufacturing, growth.
 
Real estate implications: This measure will assist rental markets and help reduce the likelihood of major forced sales (mortgagee in possession sales).
 
Infrastructure
This year’s budget will also include more money for major infrastructure projects across the country. Road, rail and transport projects all support and create jobs and also assist in opening up regional and rural areas and make transporting goods more timely and less costly.
 
Real estate implications: In terms of specific property related initiatives, HomeBuilder was a major piece of the governments’ COVID response package. While there is no indication that this will be expanded, it has definitely supported and encouraged the buying of house and land packages in new land releases.
 
One property measure which will be expanded is the First Home Buyer Deposit scheme. Currently, this scheme is available to 10,000 first home buyers and it is expected to increase by a further 10,000 places. This will also increase the limit on the purchase price of that property from $750,000 to $950,000.

Download our 2020/21 Federal Budget report here.

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