Budget 2020 in brief by REIA:

• A strong budget for small business and jobs if forecasts hold
• Good business level measures for Australia’s small business, including agencies
• Tax cuts to give buyers and sellers of property confidence with prolonged low interest rates
• Investment in regions and affordable housing welcomed post-pandemic  
• More policy support needed for Australians buying their first home

What Budget 2020 means for Australia's agents and property in general

Treasurer Josh’s Frydenberg ‘pandemic budget’ is in with Australia’s post COVID-19 road to economic recovery described as a “monumental task”. 

By the numbers, Australia’s national deficit will reach $213.7 billion in 2020-2021 and go down to $66.9 billion by 2023-24.  

Real GDP is forecast to fall by 1.5% in 2020 and grow by 4.75% in 2021.

Unemployment will peak at 8% by Christmas and fall to 6.5% by the June Quarter 2022.

No budget repair measures will be introduced until this unemployment falls under 6%. In short, budget surplus measures have been abandoned in the wake of the pandemic for the near future.

REIA has said this is a strong budget if forecasts become a reality which will serve all players in the property market well.

REIA President Adrian Kelly said: 

"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."

The Reserve Bank yesterday 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. 

Read on for REIA’s reaction and what Budget 2020 means for agents, the property market and all players in the real estate market. 

For the industry

For all players in real estate, despite figures that Finance Minister Mathias Cormann described as “objectively bad”, key stimulus measures that will give Australian customers confidence leading into Christmas this year include:  

• Fast tracked income tax cuts: Planned for 2022 personal tax cuts ‘Lower Taxes’ will be backdated to 1 July 2020 and will improve borrowing capacity and housing affordability. 
• 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. 

For agents 

For agencies, Budget 2020 has various small business initiatives that assist Australia's property agents both directly and indirectly through increased economic activity. 

These include: 

• 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 and expansion of the instant asset write off program until 2022 (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.

Helping Aussies into their first homes 

Getting Aussies into their first homes is a critical consideration for REIA. 

A good start for Australian builders and home buyers in Budget 2020 is an additional 10,000 places for the First Home Loan Deposit Scheme for new builds. 

Moving forward this should ideally be applied to all dwellings; and have all first home buyers eligible to participate.  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. 

One to watch in 2021 as a Federal Election potentially looms.  

What’s up next

REIA will host an exclusive post-Budget real estate roundtable with Minister Sukkar on Monday 12th October 2020. 

Read Prime Minister Morrison’s Economic Recovery Plan for Australia here and Treasurer Frydenburg’s speech here. 

The Federal Opposition will provide the traditional Budget Reply this Thursday 8 October 2020.

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At a glance: REIA’s Budget 2020 Recommendations. Source: REIA.

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