What the federal budget means to you
Labor treasurer Scott Morrison has announced a new federal budget that’s basically designed to take aim at the issues that Sydney and Melbourne markets are going through by limiting investor activity.
Unfortunately, this puts Queensland in a less favourable position as we are in dire need of investors. The problems that are being faced by Sydney and Melbourne simply do not exist here.
Here are the key areas of concerns we have and how they will be affected by the new federal budget scheme:
Tax advantages to those who downsize
The property market is slowing down due to the scarcity of listings, which has been brought about by the growth of hold periods for more than 11 years in Brisbane. Downsizers are being urged to opt for a more suitable sized home and sell their family homes. Retirees could then contribute up to $300,000 into their superannuation from the sale of their home.
Super saver scheme for first-home buyers
We support all schemes that help first-home buyers break into the market for as much as we can. Nevertheless, we are not convinced that the scheme allowing first-home buyers to sacrifice $15,000 of their annual salary into their super account, to a maximum of $30,000, is as effective as the state government’s program of expanding the first-home buyer grant, which would also include established homes.
How much will the $30,000 cover? In Brisbane, the annual median sale price is $640,000 for houses and $445,000 for units. This is only 4.6% and 6.7% of the value, respectively. It does not even cover the usual minimum of 20% deposit necessary to avoid mortgage insurance on the loan. If anything it can only offer minimal support for the required deposit and will possibly be a hurdle to most as the growth of wages in Queensland had remained flat for quite a considerable time.
Small Business Measures
On a positive note, we commend the Federal Government for supporting small businesses such as real estate. They have announced that they will go on with offering the upfront tax deduction for plant and equipment to $20,000 which would greatly benefit the entire real estate industry.
Foreign Ownership
What’s concerning about foreign ownership is that there was a withholding payment introduced last year for properties that are being sold for $2 million or above. They have reduced the threshold to $750,000 in property value and increased the withholding amount to 12.5% from 10%.
Regardless if you’re a foreigner or not, we do not encourage limiting investors buying properties in Queensland. In fact, we believe that the state’s property market would immensely benefit from increased investor activity as we think that the current housing market urgently needs it.
