The Federal Budget may still be almost two weeks away, yet the head of one international group is already fearful of what it will deliver for the real estate industry.
“I don’t think this Budget is going to be a pretty one,” said RE/MAX Australia’s managing director, Michael Davoren.
Mr Davoren said it's unlikely the Budget will do anything to increase employment, one of the greatest drivers of the property market.
“The real estate market is absolutely geared for a positive phase – almost all the ingredients are there,” he said. “The only thing missing is confidence, and the greatest factor stifling confidence is lack of employment opportunity and security.
“If a potential buyer has any doubt whatsoever about their employment prospects, they are not going to borrow, regardless of how low interest rates are.
“Even [though] we are still experiencing record lows, employment remains the big issue, and I don’t think this Budget will help.”
The unemployment rate increased slightly in seasonally adjusted terms by 0.2 per cent in March, according to the Australian Bureau of Statistics (ABS).
However, the ABS trend shows the rate has remained stable in March.
Mr Davoren, who with Keith Walker and Chris Chapman purchased the RE/MAX Australia and New Zealand franchises in December last year, added that the government cannot afford to threaten the property rental supply by tinkering with negative gearing, which has been tried before with "disastrous effects".
“Furthermore, unless the government steps up its role in providing affordable housing, incentive needs to be given to individuals and self-managed super funders to stay active in the investment market and help meet rental demand,” he said.
However, he believes there may be a silver lining in that Australian households may be more resilient, having saved more and reduced loans in recent years.
“This good practice has put some households in a better position to weather any detrimental changes this Budget may bring about,” said Mr Davoren.