Issue 11 | Thursday 3 June 2021 | Great News for the Real Estate Market
Hi, Andrew Bell here and it is great to be with you to be able to share the information I derived whilst at Parliament House in Canberra for the launch of the 2021/22 Federal Budget. My eNewsletter goes to the best part of a quarter of a million people, from all over Australia and from many parts of the world, and, for many, these reports provide vital insights into the Gold Coast real estate market as people are always forming views as to what they should be doing with their real estate holdings. It was great to be able to get information directly from the appropriate Federal Ministers about the implications of the Federal Budget, particularly into the real estate market.
The Budget sets the environment for a healthy economy. That is of course vital for the real estate market as it feeds through to consumer confidence, and so what most have described as a ‘big spending’ Federal Budget certainly has laid the platforms for good economic growth over the year or two ahead. It is great to see the economy bouncing back stronger than expected from COVID and the fundamental platform has been set to increase employment and to keep interest rates as low as possible. Aren’t we fortunate with our Budget compared to so much of the world that has gone into double-dip recessions.
For most people involved in real estate, they have been keen to know what direct measures were made to support a healthy real estate market. It will be important because what has kept our real estate market strong over the past six months were many of the short-term measures, such as JobKeeper and JobSeeker, that are no longer with us. It helped us with a soft landing rather than a hard landing, and of course, as most noted, this latest Budget had a heavy focus on housing and home ownership.
A key announcement was the HomeBuilder scheme which is estimated to produce $30 billion in construction. It is designed to help more Australians into home ownership and is providing an extension to the first-home buyer loan and saving schemes. It also provided changes to the downsizer incentive that is targeting the provision to free up larger homes for younger families.
There are grants of up to $25,000 for new builds or renovations and there is the expansion of the First Home Super Saver Scheme from $30,000 to $50,000. The Government has also announced a $10 billion underwrite guarantee for the reinsurance pool, which is likely to see insurance premiums for over 500,000 policy holders reduce.
From July 1, there are 10,000 Government guarantees that are being made available over four years to eligible single parents with dependents to build a new home or purchase an existing home, with a deposit as little as two percent.
There are a further 10,000 places for first-home buyers to build or buy a new home, with a deposit of just 5 percent, in addition to the 10,000 places already scheduled to roll out for existing homes.
First-home buyers will also be able to release up to $50,000 in voluntary contributions into their super funds, to pull together a deposit faster, under the extended First Home Super Saver Scheme – previously capped at $30,000.
There is also a provision for couples who salary sacrificed $12,500 from their $80,000 annual income that could help them save more than $86,000 over four years, which is at least $20,000 more than they could save in a standard savings account.
This is the largest range of programs I have ever seen in a Federal Budget and it is designed to target young families, single people, and those on lower incomes who would otherwise find it difficult to get into the housing market. It is spread over several years to keep a sense of momentum, although it could be bringing forward buyer demand that may see a softening a couple of years down the track. However, I guess that is something that had to be done to keep some momentum in our economy as we get out of the grass of the pandemic effected economy of 2020.
The outlook is for elevated levels of detached housing construction to provide the supply that is needed even though it is noted that demand will start to soften particularly because of the slower population growth and a preference for outer suburban spaces, and an awareness that detached housing preference may limit demand for apartments and curtail unit construction in the coming years.
When looking at all the above measures, it would be safe to say the Government has set up an environment to maintain near record low interest rates for the foreseeable future, and there is a higher accommodative monetary policy setting to also support borrowing. All good for real estate.
Whilst there were of course critics who believe there was an overfocus on the housing market at a time when it is already performing well, this is about making sure those struggling to get into the housing market do get the opportunity to buy their own homes.
A positive for the real estate market although those in prosperous areas may consider that it did not directly support their component of the market, however, it does because unless you have the base performing well it doesn’t flow through to the entire marketplace.
It was more than interesting to be in Parliament House on this amazing Budget night to get the opportunity to be hands on as this information was released, and to get the opportunity to hear from key policymakers. I look forward to being with you in a fortnights time with more key information about the real estate market as we keep our finger on the pulse and identify that there are already changes occurring and how those changes may affect you.
In the meantime, could we possibly feel any luckier to be here in Australia where we are regarded as one of only a couple of countries that is a standout in the way we have dealt with COVID-19, both from a health perspective and in our economy. Eternally grateful.
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group