While the Labor party have indicated that if they come into power they intend to introduce a number of taxes that will directly affect our property market, the 2019 Liberal party Federal Budget made little mention of our property markets.
However there was plenty of good news in the Federal Budget and many of the key initiatives will help promote economic growth which will be positive for our property markets.
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While our economic fundamentals are generally sound, home buyers and property investors are suffering from a crisis of confidence and our housing markets won’t rebound until consumers feel more confident about their job security, our political stability, certainty about the tax treatment of property investment and when the media stops scaremongering about a 40 per cent crash in house prices.
Fortunately there was plenty in the budget to boost consumer confidence.
The proposed tax cuts and giveaways will add to household disposable income
Our economy is back on track with a surplus and there are measures in the budget to give small business incentive to invest, create jobs, hire more people and take on more apprentices.
Infrastructure investment will help underpin our economic growth not just in our big cities but also in regional Australia as new jobs are created and local resources are used to leave a legacy for future generations.
On the other hand, migration has been reduced to 160,000 per annum (down 20,000) and this is clearly negative for housing and our economy.
While these numbers are still robust, it should be remembered that migration has been a clear driver of our economy through jobs growth and better budget outcomes as immigrants are coming here for jobs, they buy goods and pay taxes
At the same time the RBA changed its narrative at its April meeting suggesting it is now prepared to support the economy if required.
In other words, it will be prepared to cut interest rates if our economy falters or if unemployment rises. This is again positive for property.
The bottom line is that the Budget will encourage confidence and support house prices, but as it is unlikely to be enough to keep Liberal Party in power at the upcoming election, be prepared for a raft of tax changes that could be negative for our property markets.
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