A STRONG BUDGET FOR SMALL BUSINESS AND JOBS IF FORECASTS BECOME A REALITY
Budget 2020 by the numbers:
- Australia’s national deficit to reach $213.7 billion in 2020-2021 and go down to $66.9 billion by 2023-24.
- Real GDP forecast to fall by 1.5 per cent in 2020 and grow by 4.75 per cent in 2021.
- Unemployment to peak at 8 per cent by Christmas and fall to 6.5 per cent by the June Quarter 2022.
What Budget 2020 means for Australia’s agents and property in general
Treasurer Josh’s Frydenberg ‘pandemic budget’ is in with $507 billion spent to date on the response and recovery to the COVID-19 pandemic.
REIA has said this is a strong budget if forecasts become a reality which will serve all players in the property market well.
"Economic activity is forecast to pick up strongly from late 2020 and into early 2021, driven by a further easing of Covid-19 containment measures and improving business and consumer confidence."
"The Australian Government’s focus on creating employment and generating reemployment through various Budget measures is welcomed by REIA and is good news for tenants, investors, home owners and those wishing to sell."
REIA President Adrian Kelly
The Reserve Bank has announced it will keep interest rates at 0.25%; and while Budget 2020 is silent on future targets for migration, expect an announcement on this in the coming months.
For the industry
Key stimulus measures that will support Australian real estate stakeholders include:
- ‘Lower Taxes’ : Personal tax cuts will be backdated to 1 July 2020 and will improve borrowing capacity and housing affordability, as well as lenders ability to meet repayments.
- Negative gearing: No changes to critical housing policies such as negative gearing.
- A boost to affordable housing: The National Housing Finance Investment Corporation (NHFIC) has been given another $1 billion for affordable housing. REIA has applauded this move as the pandemic has only highlighted the critical role the private sector has played to support tenants requiring support.
- Jobs: Overall a substantial stimulus for Australian jobs through JobMaker, JobTrainer and $1.2 billion for apprenticeships.
- Regional development: The substantial economic and social infrastructure investment in the regions supports the strong growth seen in both sales and rentals in Australia’s regions due to changing demographics from Covid-19.
- An additional 10,000 places for the First Home Loan Deposit Scheme for new builds. That being said, REIA has reasoned that new places for new builds doesn’t actually meet the needs and preferences of Aussie first home buyers with over 80% of first home buyers choosing established dwellings.
For agencies and small businesses
Budget 2020 has various small business initiatives that assists Australia's property agents and the broader small business community.
- Reintroduction of the tax loss carry-back provisions which will be of particular help to Victorian businesses and also property investors operating within corporate structures.
- An extension of the instant asset write off program until 2022 for the majority of Australian businesses (please note – the ATO is still updating this page).
- Eligibility to participate in the JobMaker hiring credit program.
- Property transaction digitalisation as identified pre-Budget, a long standing policy of REIA and a major gain to come out of COVID-19.
Reactions, commentary and for more information
- Australian Taxation Office
- Prime Minister Morrison’s Economic Recovery Plan
- Treasurer Fryenburg’s Budget Speech
- For construction and property industry reactions, Master Builders Australia and Property Council of Australia