On Tuesday evening, Federal Treasurer Josh Frydenberg handed down the 2022-23 Federal Budget, which the Real Estate Institute of Australia (REIA) has labelled a ‘budget for the times’.
While REIA welcomed the measures in the budget, saying they will help constrain runaway inflation, provide the right signal for interest rates and assist challenges to housing affordability – they are disappointed more wasn’t done to improve productivity and prosperity.
The 2022-23 Federal Budget breakdown
First Home Loan Scheme the big win for real estate
REIA President Hayden Groves said the 50,000 new places coming online through the First Home Loan Scheme was the biggest win for real estate in the 2022-23 Federal Budget.
“This is a $24 billion commitment in Guarantees that could generate up to $30 billion in sales activity which will directly assist first home buyers into the market sooner as well as stimulate the economy.
“Setting up Australians into homeownership is a critical measure at this stage of Australia’s political and economic cycle and it is applauded by REIA,” Mr Groves said.
The national real estate body has also welcomed the additional allocation of $2 billion to the National Finance Investment Corporation’s mandate to help enable much-needed supply of social and affordable housing.
Forecasts for inflation conservative
REIA has said while there are some very good measures that will help the economy, the forecasts for inflation are very conservative at 4.25 per cent for 2022 and then three per cent and 2.75 per cent over 2023.
“Even on these forecasts wages growth is very modest over 2022 to 2023 which doesn’t augur well for interest rates and housing affordability,” Mr Groves said.
Australia’s future looks bright
Mr Groves said the 2022-23 Federal Budget painted an optimistic picture for Australia’s immediate future.
“Unemployment is forecast to hit a historical 3.75 per cent low in 2022-23 in a boon for the Australian jobs market.
“Dwelling investment too is forecast to peak at five per cent in 2021-22 and grow a further 3.5 per cent in 2022-23 as the Homebuilder program is phased out and supply chain crunches come into play.
“With a lower deficit than anticipated and real Gross Domestic Product (GDP) figure forecast to grow at 3.5 per cent in 2022-23, this is a strong budget for the times as we emerge from the COVID-19 pandemic,” Mr Groves said.
Improved productivity needed for prosperity
While REIA is pleased the 2022-23 Federal Budget addresses the transitory conditions Australia is experiencing with targeted measures, they have called for more to be done to improve productivity and real wages, rather than just compensation for price increases and taxation reform.
“It is only through sustained economic growth that we will pay for the spending of the last two years, necessary as it was,” Mr Groves said.
REIA as calling for a sizeable skills package to help set up the industry’s workforce for the future.
“The 27 per cent of Australian’s living in private rentals remain frustrated by our 4,500-property manager shortage as do Australia’s real estate agencies,” Mr Groves said.
“Whilst we were disappointed to see the final intake of the very successful Boosting Apprenticeships continued only until the end of June 2022, we hope the additional $2.8 billion for the five-year Australian Apprenticeships Incentives Program will be extended to all those who need it in the post-COVID-19 world.”
The housing supply issue needs must be addressed
Another key area of concern for REIA is housing supply and affordability.
“One of the major areas governments can address housing affordability is to take a leadership role to unlock supply through National Cabinet,” Mr Grove said.
“This is obviously something that needs to be tackled in future budget cycles with all three tiers of Governments. Until this is addressed, the right supply mix within our existing housing stock and new homes affordability is unlikely to improve in the near term.”
2022-23 Federal Budget ‘reassuring’
Mr Groves said overall the 2022-23 Federal Budget was reassuring for homeownership and all consumers or aspiring consumers within the property market.
“Pre-election periods can mean Australians can be reluctant to list their home for sale or rent.
“With a budget that deals directly with inflationary pressures, contains a moderate outlook for interest rates and supports key investment measures like negative gearing retaining bi-partisan support, Australians should move forward with plans to sell and capitalise on the current strong market conditions.
“This is a great budget for homeownership but more needs to be done to set Australia up for future success. Australia needed a strategy for longer-term and sustained economic growth,” Mr Groves said.