The Australian Federal Budget for 2020 was one of the most widely anticipated given these unprecedented times we’re all going through. All eyes were on where spending would be directed, how jobs growth would be stimulated, how businesses would be incentivised to create now jobs and spend money, and overall as property investors how these changes could impact the Australian property market.
It is precisely this that we’re exploring this week. How will the key announcements in the Australian Federal Budget impact the Australian property market going forward. Let’s have a look at some of the key changes that will impact the Australian property market from the 2020 Australian Federal Budget:
Increased First Home Loan Deposit Scheme (FHLDS) places
There have been a further 10,000 spots made available for the First Home Loan Deposit Scheme (FHLDS), which allows first home buyers in Australia to get into their own home with as little as 5% to put toward their deposit.
Increasing pricing thresholds for the FHLDS
The additional FHLDS places are for construction loans and the purchase of new homes and the Australian Government has also increased the price thresholds for the property prices eligible for the FHLDS. These new thresholds are outlined in the table below:
Personal income tax cuts
The key announcement here is that personal income tax cuts that were originally scheduled for 1 July 2022, are now brought forward as per the table below. These tax rate thresholds will be as follows:
There are two possible outcomes here when it comes to the Australian property market. On the one hand, the benefits for many middle-income earners of negative gearing will be reduced given the lower net effective tax rate, however at the same time their take-home pay will increase, which may make purchasing an investment property possible. This will impact different households in different ways we expect.
Introduction of JobMaker and JobTrainer funds
These two programs are simply designed to get more young people into the workforce or apprenticeships and into long-term gainful employment. This is achieved by creating wage subsidies for those employing people under the age of 35, and funds available for up to 100,000 apprenticeships. Given these demographics, we expect that this will keep rental demand, particularly for inner city dwellings, quite buoyant.
These are the main elements that we see supporting the Australian property market going forward. We will be watching these outcomes closely.
If you have any questions about the Australian Federal Budget or other items, please reach out and we book in a complimentary chat.
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