The Federal budget is just around the corner, and as expected, this budget will include new expenditures when it comes to the real estate sector.
According to resources, the 2024 Federal budget, which will include more than $11 billion in new expenditures for housing and new home construction, will save many homebuyers money through cost-of-living support.
Federal Treasurer Jim Chalmers is expected to present a budget that prioritises cost-of-living adjustments and is unlikely to cause inflation.
The general public and analysts are concerned that the government’s flagship housing objective of providing 1.2 million new, well-located houses over five years is unachievable. This will force the housing supply to take centre stage, but you never know the final budget until it’s released to the public.
Here is what is currently known about the housing budget.
There are certain notions of the federal budget which are expected to be announced, such as:
- Increasing the availability of homes
It is expected that the federal government will allocate almost $11 billion on housing around Australia in the new federal budget. - Additional budget for crisis housing
Apart from this $11 billion, an additional $1 billion would be spent on crisis housing for women and children escaping domestic abuse, and a further $1 billion will be allocated to community facilities, roads, and water systems to enable the construction of new housing.
- It is expected that a joint agreement between the federal, state, and territorial governments to invest $9.3 billion over five years to support the construction and restoration of social housing will also be included in the housing package.
Dr Chalmers also suggested earlier that the budget would include more measures to address Australia’s housing crisis, including the ongoing scarcity of dwellings and the rising rate of inflation, and it is expected that the budget will directly address the issue of construction prices.
Dr. Chalmers declared that “housing will be a focus of the budget and for a range of reasons. The primary issue facing this nation is a shortage of housing. Because of this, we have set an ambitious but realistic goal to build 1.2 million new homes in five years starting in July of this year.”
This comes to light because of the lack of skilled workers in the home building/construction industry. Due to a lack of trained labour, the home building industry has been severely hampered in producing the necessary number of dwellings for Australia’s rapidly expanding population, and the situation continues to deteriorate because of the unavailability of skilled workers as well as the construction materials’ prices which are on a hike as well.
A senior economist at PropTrack, Eleanor Creagh, stated that the primary concern at hand is the lack of housing, given the skyrocketing costs of real estate, the lowest level of affordability in over twenty years, and a collapsing rental market which can cause real damage in years to come if not treated now.
“Labour shortages have been a critical issue hampering the ability of the industry to deliver on new supply, so it’s encouraging that a reported $90.6m has been allocated towards boosting skilled workers in construction and housing,” said Ms Creagh.
“However, with demand for housing remaining strong and measures to ease supply constraints far from imminent, the imbalance between supply and demand that has offset the higher interest rate environment and deterioration in affordability is expected to remain, fuelling further price rises.”
Jocelyn Martin, Managing Director of the Housing Industry Association, praised the measures that are to be introduced in the Federal budget to curtail this gap between the demand and supply of houses.
Ms Jocelyn Martin said, “The government will fall well short of its housing target without an adequate workforce, which is one of the key issues in building these much-needed homes. While we acknowledge that the problems caused by a skills gap won’t be resolved quickly, it’s good to see the government provide specific funds to support the recruitment of more people into the sector.”
Let’s have a look at some of the reforms to watch out for in this Federal budget 2024:
Tax-cuts
The biggest cost-of-living relief expected in this budget is the tax cuts. According to resources, the new version of taxes will witness that all the taxpayers will get a cut from this July 1st, and this benefit will continue to stream down towards the middle and low-income earners. The new tax cuts will lower the tax rates for the low-income brackets, where the threshold will be increased for the workers in the highest-earning block and the middle ones.
There will be no change to the current tax-free threshold of $18,200, but a taxpayer with a full-time Income of $98,217 is expected to receive a tax cut of approximately $2,134 compared to last year.
Help to Buy Scheme
The Help to Buy scheme is still going through a difficult phase as the Greens and Coalition are opposing it ferociously, but this will be a blessing in disguise for the government and the Australians. This scheme will help the citizens to get home ownership with the help of the government of up to 40% of the purchase price in exchange of a share, or it could be a proportional interest in the said property.
The Help to Buy scheme is under negotiation, and the government hopes to get it passed through the Senate.
Rent Assistance And Welfare
People on welfare recipient are most likely to receive a boost in payments and rent assistance from the government,
Dr Chalmers stated that the government is planning to take “additional steps in the budget” for people who receive social security payments.
The government will be adopting new measures under the banner of the Economic Inclusion Advisory Committee (EIAC), which made 22 recommendations, including increasing Jobseeker payments and the rate of Commonwealth rent assistance.
“Renters are under pressure in particular, and that’s why… you can expect to see new initiatives in the budget on housing.” Dr Chalmers stated.
Final Thoughts:
The Federal budget for 2024 will be people-centric, but it seems like it will give the right kind of boost to the real estate market, which is necessary. Once the budget is released, we will find out how far the policies are helpful for consumers and investors. For more on this topic, stay tuned.
