March 30, 2022 by Dymphna

What the Budget means for property

No major news for property in this year’s budget, but a few interesting things to note.

So here’s a few quick thoughts on the budget, with a particular focus on what it means for property.

There isn’t all that much that directly impacts property. The stand-out is an extension of the FHBDS – first home buyer deposit scheme – where the government guarantees the deposits of eligible borrowers, and allows them to borrow with as little as a 5% deposit, without having to pay lender’s mortgage insurance.

This scheme has been popular, having been fully subscribed since its inception a few years ago.

It’s not a huge program – only 10,000 places – but it’s something.

Anyway, the program has been extended, at a cost of almost $140m.

The other interesting thing about it is that it has now been extended to include regional areas.

Interestingly, regional home buyers can access the scheme even if it’s not their first home. As long as its their principal place of residence, they’re eligible.

There will be price caps on the properties that will be eligible, but we’ll have to wait until October to learn what they are.

My sense is that to be consistent with the metro program, the caps will probably be fairly low, and this might end up excluding some major regional centres all together.

But we’ll see.

Otherwise the budget was fairly predictable, in the sense that it splashed a whole bunch of cash at key segments of the voting population.

There was the long-awaited cut to the fuel excise (22 cents per litre), the $250 “bonus payment” for those on income support, and an additional one-off $420 tax offset for low- and middle-income earners.

All told, these measures will tip an extra $8bn into the economy.

Now, given that the economy is already running fairly hot, and the unemployment rate is tilting towards a historically low level of 3.75% over the forward estimates, some economists are asking if we really need to be pouring more fuel on that fire.

But this is an election year after all.

And so the governments seems to want to have its cake and eat it too. Many of the measures, like the cut to the fuel excise, are scheduled to be temporary and reverse relatively quickly…

… but not until the other side of the election.

So it’s a cash-splash today, and fiscal responsibility can wait til tomorrow.

In sum, given all the other tail winds behind property right now, this is likely to push prices higher at the margin, but not in a major way.