By Joel Davis, Image Property
The government has announced hundreds of billions of dollars in economic stimulus measures in its 2020 Federal Budget.
While the property sector has been mostly overlooked in the budget that doesn’t mean that the initiatives will not have a positive impact on property prices.
There is no question that the record “spendalthon” is designed to support employment and create hundreds of thousands of jobs to help our economy recover from the pandemic.
So, here are five key budget initiatives that will positively impact the property market in my opinion.
1. First home owners
Not only has the Federal Government created a further 10,000 places in its successful First Home Loan Deposit Scheme but it has also increased the program’s property price caps.
The scheme enables eligible first home buyers to secure a loan to build a new dwelling, or purchase a newly built one, with a deposit as low as five per cent of the purchase price.
In Queensland, the property price cap has been increased to $650,000 in Brisbane, the Gold and Sunshine coasts and $500,000 in regional areas.
These increased thresholds will certainly enable more prospective property owners take advantage of the scheme.
2. Changes to responsible lending obligations
Some borrowers have struggled to secure finance this year because of overly restrictive lending practices.
However, the government has announced that it is simplifying Australia’s credit system to make the application process faster for consumers.
It will also streamline the way that lenders assess applications, which had become rather onerous, by allowing lenders to rely on the information provided by borrowers in what is being called the “borrower responsibility” principle.
3. Lower personal income taxes
We’re all getting a tax cut, which will help with household cash flow as well as encourage consumer spending.
Under the government’s changes, low- and middle-income earners will receive tax relief of up to $2,745 for singles, and up to $5,490 for dual income families, this financial year.
Around 11.6 million people will receive a tax cut in 2020–21 with the majority of the benefit going to those on incomes below $90,000.
4. Infrastructure investment
During times of economic trouble, it is common for governments to embark on ambitious major infrastructure programs – and that is certainly the case this time around, too!
The government is increasing spending on its infrastructure pipeline from $100 billion to $110 billion over the next 10 years.
The COVID 19 infrastructure package will provide significant investments in major road and rail projects, road safety and community infrastructure, including in southeast Queensland.
The government will also provide an additional $10 billion in funding towards projects over the next four years, bringing total commitments since the start of the pandemic to $14 billion.
5. Job creation measures
The government’s JobKeeper program was all about protecting jobs during the pandemic, which it certainly has achieved.
The next phase in our economic recovery is all about creating jobs so unemployment can start to move back to a more normalised level.
One of the key measures announced in the budget was the JobMaker Hiring Credit, which provides incentives to businesses to take on additional employees aged between 16 and 35.
The credit will be available to employers for each new job created over the next 12 months and will provide $200 per week for every eligible employee aged 16 to 29, or $100 per week for an eligible employee aged 30 to 35.