What Does the 2014 Budget Mean for Property Investors?

June 10th, 2014

shutterstock_164369303

The Federal Budget has caused a stir at nearly every level of society – middle class families, the sick, public servants, students, motorists and those approaching retirement. Yet there will most likely be some big changes that affect property buyers and sellers too. What’s more is that these then have a knock on effect for the rest of the country. After all, property as an industry accounts for about 11.5% of Australia’s GDP. Let’s take a look at where Australia’s property sector could be heading.

The good news – negative gearing and infrastructure

There has been a lot of worry about negative gearing but so far property owners and investors have been saved any changes.

Other good news for investors is that Australia’s infrastructure is being given a $11.6 billion boost from the budget, which could make certain locations much more appealing to buyers. Key infrastructure has a positive effect on housing prices. Some of the big projects around Australia that might give a hint as to smart investing choices are:

  • The WestConnex in Sydney
  • The East-West Link in Melbourne
  • A North-South arterial road in Adelaide
  • An upgrade of the Bruce Highway in Queensland
  • A new bypass in Toowoomba.

The bad news – First Home Buyers and renters

The Australian dream of owning your own home may be further away now as the government announced that it will get rid of the First Home Saver Accounts Scheme (FHSA) from 1 July 2015. The scheme was initially a form of incentive for first home buyers’ savings as the government helped contribute to the money in these accounts, taking a bit of the financial strain off first home buyers. After July 2015 these accounts will be treated just like any other.

In addition, the National Rental Affordability Scheme is on the back burner while it is being reviewed. It was intended to help improve Australia’s rental crisis by building homes for low to middle income earners.

Things to watch out for

There are some interesting trends that property buyers and investors will need to look out for in the future. Overall, Australia is facing the issue of catering towards an ageing population, and there is some key infrastructure that will be needed to handle it. Ageing populations can cause issues for a nation’s economy as spending on this demographic increases while money received from taxes reduces. Has the budget taken this into account? Only time will tell…

Furthermore, it’s advisable for property investors to keep an eye on the increasing interest our Asian neighbours have in Australian property. But surely you’ve already heard all the hype? Whether to believe it or not is another matter which is discussed here.

Of course it must be said that some budget changes are yet to be settled as they must be passed in both houses of parliament. So watch this space.