The 2017 budget has recognised the need to address housing supply and affordability through a number of complementary measures, says the Real Estate Institute of Australia (REIA).
“The boost to infrastructure spending, measures to improve housing supply, the extension of small business concessions and the retention of the current negative gearing as well as CGT arrangements for taxation of property investments will help ensure that the property sector remains an important contributor to economic growth,” REIA president Malcolm Gunning said.
“Whilst investment in dwellings has peaked and growth is forecast to decrease to 4.5 per cent in 2017-18, compared to 8.0 per cent in 2016-17, it is still a major driver of economic growth,” Mr Gunning said.
Mr Gunning said he is pleased that the government will not remove or limit negative gearing or change the capital gains tax.
“This would increase the tax burden on Australians trying to provide a future for their families,” he said.
“With home ownership in Australia declining and first home buyers finding it increasingly difficult to enter the housing market, allowing first home buyers to build deposits with superannuation through voluntary contributions is welcome.
“Whilst REIA has advocated for a more aggressive approach to bridging the deposit gap by allowing first home buyers access to existing balances in superannuation accounts, the government’s initiative will reduce the time taken to save for a deposit by around 25 per cent.”
But Mr Gunning said the change in the threshold for foreign resident capital gains tax withholding to $750,000, from the current $2 million, is not welcome.
He called it “more red tape” and unnecessary.
“It could be considered misguided as most foreign investors buy higher-valued properties in Sydney and Melbourne and to a lesser extent in Brisbane,” Mr Gunning said.
“With the median house price of $743,776 across Australia, this will mean most properties will be subject to this requirement and results in more work for sales agents and conveyancers and depending on the workload this presents for the ATO, may even delay settlements.”