Understanding the Federal Budget
There’s been quite a bit of discussion this week since the Federal Budget was presented in Canberra on Tuesday, May 12th, and a fair portion of that discussion has been focused on property. So I thought this would be an opportune time to try to provide some clarity on what is happening.
Firstly, there appears to be two distinct sets of Australians who will be paying close attention to what is coming…property investors and first home buyers.
The impact on first home buyers will come from the fact that the Federal Government is taking steps to direct the attention of investors away from established housing, towards new housing. This means that, in theory, first home buyers will face less competition from investors for established homes, and therefore could be able to purchase this property for a bit less. Now, this may end up being debatable if there are more first home buyers entering the market, so we will have to wait and see.
For property investors, we are likely to see a shift in the market as Government policy is now increasingly favouring new residential property over established housing, with incentives and tax settings designed to encourage investment into new developments. This should, in turn, encourage an increase in housing supply which is aimed at increasing long-term rental availability as well as increasing the supply of housing for home buyers.
The shift towards new housing supply
The reforms are designed to increase demand for several categories of new residential properties, including:
- Newly completed residences, both houses and units;
- Off-the-plan apartments;
- Medium-density housing projects; and
- Build-to-rent developments.
Why will investors find new homes more appealing?
New homes and apartments are likely to offer greater depreciation benefits during the early years of ownership compared to older established properties, which may can improve the after-tax holding position for some buyers.
Of course, buying property off the plan can also lead to stamp duty savings. This is why, with strong rental demand across Melbourne, new residential property is likely to be viewed as an efficient long-term investment.
As is always the case, it is important that any decisions you make regarding your investment plans are assisted and supported by experienced independent advice. As part of that process, if you need any help finding the right property in the right area, you can always make a call to our team at Barry Plant Thomastown on 9466 3233.
Best wishes,
Con Constantinou
Barry Plant Thomastown
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