Earlier this month, the Treasury released the Federal Budget for the 2016-17 financial year, and there are some interesting changes being made that could affect peoples' ability to buy a house on the Gold Coast.
For one thing, negative gearing and the capital gains tax hasn't changed for this year. That means property investors will still be able to buy and sell as much as they can before those law changes come into effect next year. That's actually a good thing for the economy, as it pumps money into the industries where money is needed, however it does tend to make the buying landscape more competitive.
So, how has the Budget affected the property market, directly or indirectly, and what does it mean for your property buying dreams?
There have been noticeable changes to tax brackets, and middle-income earners are the ones who will be seeing the most significant changes to their day-to-day functioning. High-income earners have also seen some slight changes, which PricewaterhouseCoopers states is known as 'bracket creep'. These alterations include a difference to the second-highest tax bracket, allowing slight relief.
As more people are finding slight allowances to their abilities to save money, will it change the way we save? The Australian Securities and Investment Commission's SmartMoney finds that only 16 per cent of residents are saving money with ease, while 41 per cent are able to put a little aside each month. That's not a great result, as typically people would need to be saving in order to fund the purchase of a property.
This is leaving the door open to investors, and while that's going to be welcome news for portfolio-holders, it could well make the rest of the landscape a little more difficult to break into. People need to be saving more money so they can afford to buy a home – it's a fantastic, stable investment that you can actually use everyday, what more could you want from something you put money into?
"We are pleased that the Treasurer in his Budget Speech reiterated that the Government will not remove or limit negative gearing or change the capital gains tax as this would increase the tax burden on Australians trying to provide a future for their families," said Real Estate Institute of Australia president Neville Sanders in a 3 May media release.
While this is true, one of the best ways that Australians can provide a future for their families is through the property market. In order to make this a reality, people need to be taking advantage of the Budgetary changes that are potentially allowing them more saving ability.
At the start of April, On Property reported that only 7.9 per cent of people own an investment property, with most holding the title to only one. That means a total of 1,764,924 people in Australia own a home for investment purposes, and only 0.068 per cent own six or more. That's a fairly small portion of the market, but one that might be turning people away from buying because it's only going to get more competitive.
However, recent figures from the Australian Bureau of Statistics point out that residential dwelling construction around the country is increasing.
More people are looking at building a new home as a way to stay ahead of the curve and get into a home that is not only brand spanking, but will also not be competed for in a bidding war. You'd still need land, but that's not necessarily as sought after as an existing home.
The Gold Coast property market is going to be growing for years to come, it seems. Act quickly before the boom really takes hold, and make the most of the Budget affording some slight tax relief as well! Get in touch with the team at Ray White Surfers Paradise – we'll get you where you want to be.