Federal Budget – 2018/19
The Federal Budget was recently announced and little was associated to the property market other than some massive infrastructure changes that will place a positive impact on property prices but also impact interest rates in the near future.
The government confirmed that wage increases have averaged 2% p.a. but they predict this to increase to 3.25% p.a. by 2020. Should this prediction come to fruition, this will influence the Reserve Bank of Australia (RBA) to increased interest rates in time. The RBA will take close look on the impact of inflation as wage growth occurs.
So what are the infrastructure plans?
It’s expected that $75 billion will be spent over the next 10 years on transport infrastructure. These funds will include the much anticipated Melbourne airport to Melbourne CBD rail link.
Plans are now in place to fast-track planning for the North East Link. The latest budget also features plans for the Mordialloc Bypass and Monash Freeway upgrades, but it’s immediate focus looks to be fast tracking the completion of the North East Link. These changes could result into some big changes for the local property markets. It’s assumed that that traffic congestion will significantly ease. Removing 15,000 trucks and 9,000 vehicles from some of the busiest areas.
With the eastern corridor experiencing unprecedented population growth, there will be funding for the Cranbourne/Pakenham rail corridor and further upgrades to power upgrades and modern signalling.
Additional spending will take place for regional rail upgrades, supporting V/Line services and money will be allocated to repairs regional roads as traffic numbers increase.
Changes to foreign investors.
In the last Federal Budget presented in 2017, government removed a number of foreign investor incentives. The main residence/capital gains tax exemption on residential property owned by foreigners disappeared. All new off-the-plan developments restricted foreign investors to a maximum of 50% of sales. Additionally an annual $5000 ‘ghost tax’ was announced on all foreigners who choose to leave their property vacant (meaning they don’t occupy or lease it for less than 6 months of a year).
What else has changed?
There are other topics highlighted in the Federal Budget including the First Home Super Saver Scheme and the incentives for seniors downsizing and allocating funds to superannuation. These areas are quite specialised and differ for each individual’s circumstances. We recommend consulting a financial planner before proceeding with any of these changes.
With an upcoming election, there will be more discussions around the property market and the housing affordability. Follow us of Facebook and Instagram, or subscribe to our monthly emails. We will keep you well informed as things change.
If you would like to explore your options further and ascertain if any of these changes will affect you, please don’t hesitate to contact us.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
May 2018
