I’m expecting a property-friendly budget today.
The budget is shaping up to be a pretty property friendly.
On the whole, the budget is going to maintain a stimulus footing. There’s more money going into the economy through spending than there is coming out through taxes.
And it will be true that the budget bottom line that we used to care about so much is improving. The economy is going great guns, and a commodity boom is funnelling huge amounts of cash into government coffers.
But despite the projected improvement, the federal budge will remain well and truly in the red going forward.
And that’s cool. I’m ok with that.
The experience in India shows us that the global pandemic is still with us. And it’s like a fire. You can put it out in one corner of globe, but until its extinguished everywhere, you’re always at risk.
So let’s not get complacent just yet.
So we can expect the money to keep flowing, with a particular focus on infrastructure.
And we know from the information leaked already that there’s going to be a few sweeteners for the housing market.
The list, according to the AFR, looks like this:
- An extra 10,000 places will be made available under the New Home Guarantee, allowing first home buyers to buy a place with as little as a 5 per cent deposit, while the amount of money that can be released from their superannuation will be lifted to $50,000.
- More than 10,000 single parents will be allowed to buy a home with a 2 per cent deposit under a separate government-guaranteed home loan scheme targeting women.
- The government will allow the superannuation guarantee to increase to 12 per cent after flirting with stopping it.
- The maximum amount of voluntary super contributions that can be used to purchase a first home will be increased to $50,000 from $30,000.
Classic. Who doesn’t love this.
Everyone wins. For some people, it’s going to become easier to get a house. That 2% deposit thing is a real game-changer, and I think it’s a great idea to support single women on that mission.
Landing secure housing for you and your kid is a huge step towards creating better life outcomes for everybody.
And at 2%, it really makes that deposit hurdle a lot lower for a lot of people. For a property worth $700K, we’re talking about a deposit of just $14,000, rather than something like $140,000 for most people.
So that’s huge.
It does mean the tax-payers are taking on the risk of default and so on, but I’m ok with that too.
The family home always comes first, and if someone is defaulting on a mortgage you know its because things have seriously gone pear-shaped. Default is not a decision taken lightly.
And in a world where we’ve got cash for everyone, why not given single mothers a leg up too?
The thing we have to watch here is what impact this has on the entry-level of the segment.
Since these are all demand-side measures, pushing up demand can also push up prices.
And on the whole, all of these measures, on top of the huge cash-splash on infrastructure, will give property prices a lift.
It’s a very price-positive budget. I think we can say that much.