Budget 2019 focused on a strong economy

Prime Minister Scott Morrison and Federal Treasurer Josh Frydenberg handed down the Federal Budget last night.

With a Federal Election on the horizon, the centrepiece of the budget was a cash rebate pitch to middle income earners and no changes to taxation legislation this side of an election.

It’s the second year in the row there was no mention of assisting first home-buyers, and no real changes to the status quo on the property sector.

$100bn has been allocated to infrastructure over the next decade, where the real winners were Queensland and Victoria.

Small business looks to be a winner as the instant asset write-off threshold will increase from $25,000 to $30,000 per asset.

Eligibility for the scheme has been expanded from small businesses (up to $10 million in annual turnover) to medium-sized ones (up to $50 million).

The Coalition has also projected the first budget surplus since the GFC, providing credentials for good economic management.

Speculation continues an election may called before the weekend.

Industry Reaction


According to CoreLogic’s Head of Research, Tim Lawless, there was very little in the budget directly focussed on the housing sector.

“With the performance of the housing and household sector so critical to the Government achieving their forecasts and planned surplus, there is certainly an argument that more could have been provided in the budget to support these sectors.”

Lawless noted that the Government expects wages to rise only modestly, with growth forecast to rise from 2.1% to 2.5% in 2018/19 before ticking higher to 2.75% in 2019/20, supported by lower unemployment and jobs growth of around 2% per annum.

“Based on these forecasts, and their potential to undershoot as they have over previous years, we can’t rely on a material improvement in household incomes to boost spending and stave off a higher rate of saving, he said”

On the positive side, Lawless points out that household income and consumption should find some support from personal income tax cuts for low to middle income workers (those earning $126,000 or less) and cost of living relief to pensioners.

Lawless argued that the state and local governments have more ability to tackle housing affordability than the federal government, with factors such as stamp duty payments, allocation of the first home buyers grant, land release, development charges and town planning all falling outside of the federal government arena.

Perhaps the most substantial area of the budget related to housing, according to Lawless, is a reiteration of the strong infrastructure spend and the City Deals, which will provide stimulus for specific regions of the country and help to cushion the downturn in residential construction. ”

“Infrastructure spending is up 25% on last year, with a record level $100 billion spend over the next ten years. While the allocation of this spend is short on detail (likely to be trickle fed to the market via election announcements), it seems much will be dedicated to improving transport infrastructure in an effort to ease congestion and better manage population growth. ”

Major projects included funding of $2b for the fast rail between Melbourne and Geelong, a quadrupling of the urban congestion fund to $4b and detailed assessments for additional fast rail corridors.

“The City Deals are nothing new, however the budget reaffirms commitment of $5.7 billion of funding delivered in Townsville, Launceston, Western Sydney, Darwin, Hobart, Geelong and Adelaide, as well as the announcement of a recent deal for South East Queensland. The Government has also announced a roll out of regional deals for Barkley NT, Hinkler Qld and Albury Wodonga NSW/Vic.”

Lawless speculates that the strong infrastructure spend and investment in improving the key areas of Australia’s cities will be stimulatory for housing markets that benefit from the improvements but the questions remain as to whether $100 billion is enough to tackle the infrastructure deficit.

“Overall, the Budget didn’t really focus on housing however, some of the associated issues such as household incomes and infrastructure investment are being addressed which is positive to see,” Lawless concluded.

Dan White, Managing Director, Ray White

“The Coalition’s tax relief promises are welcome and will be a shot in the arm to every household in Australia,” Mr White said.

“A strong economy needs ongoing investment and we are delighted to see the Coalition boost its infrastructure spending to unlock our regions and help ease congestion in our cities.”

Mr White said his company remained optimistic about the Australian housing market, hoping the Government keeps its focus on the housing sector while being ready with a contingency plan if their assumptions and forecasts aren’t met.

“This Federal Budget and its growth projections are heavily reliant on our already softer housing market holding up.

“But no-one in Treasury has a calculator that can accurately predict house prices,” he said.

“That is the great unknown in this budget and easing house prices are clearly Treasury’s economic wildcard.”

LJ Hooker

According to LJ Hooker’s Head of Research, Mathew Tiller, Delivered the budget was always going to offer more sweeteners than tough decisions.

However, he questioned how relevant the budget would be to Australians given the new measures outlined will not be debated or legislated before the federal election campaign begins.

“There were no announcements, changes or incentives that will directly affect homeowners, real estate investors or the property industry in general.

“That said, personal and small business tax cuts will assist with cost of living pressures, consumer spending and business investment,” Mr Tiller stated.

Another point Mr Tiller proclaimed as double win for small businesses was the immediate increase in the small business instant asset write-off threshold and the lowering of the tax rate (to 25 per cent by 2021/22) for businesses with a turnover of less than $50 million.


According to the REIA, the 2019/20 Budget provides a fiscal stimulus by increasing infrastructure spending and delivering higher disposable incomes to 10 million low to middle income earners.

“Whilst there were no major surprises in the Budget, the measures will lift the brake of economic activity,” REIA President Adrian Kelly said.

The Budget papers forecast private investment to fall by 7 per cent in 2020/21 and a further 4 per cent in 2021/22.

According to Mr Kelly, they also highlight the importance of the housing sector to economic well-being, pointing out that a 10 per cent drop in housing prices reduces real GDP by about 0.5 per cent.

“Given the recent falls in house prices and the possibility of further falls, which will be exacerbated if the Opposition’s housing taxation proposals are implemented, it is timely to see the importance of the housing sector to Australia’s economy illustrated.”

“With the Government’s commitment to not altering taxation arrangements for future property investors this means that the increased disposable incomes of low to middle income earners can be spent on goods and services and keep the economy ticking over rather than higher rents and worrying about decreasing equity,” Mr Kelly said.


The REIV commended the Federal Government’s 2019/2020 Budget, saying that it ticked many items on their wish list and will set Victoria on a strong course for further economic growth.

REIV CEO, Gil King said it was a shot in the arm for small business’ which are the backbone of the Australian economy.

“Most real estate agents are small businesses and local employers which will benefit greatly from company tax cuts to 25 per cent and the significant increase in the immediate asset right-off,” Mr King said.

“These stimuli will enable small business to invest in growing their business, employing more people and training their workforce.

“The REIV lobbied the Federal Government around issues of city sustainability and therefore we welcome the $6.2 billion in infrastructure commitments to Victoria, the majority to go towards public transport and roads.”

Mr King said this funding will help ease the significant congestion issues that cities are facing and address the dire need for upgrades to suburban and regional roads, while having a positive impact on property values.

“Regional Victoria has weathered the storm of the recent property downturn, in part this is due to improved infrastructure in and around major towns and the Budget allocation for more spending in this area will accelerate the real estate appeal of Victoria’s regional areas,” Mr King said.

The REIV were also optimistic about the funding boost for training, together with the 10 new training hubs in regional areas.

According to Mr King, real estate agents in country towns are often a pivotal cog in their communities and the REIV intends to work closely with the Federal Government to ensure that regional agents can access these training funds to assist young people to get a great start in their real estate careers.

Mr King also addressed the institute’s strong position on negative gearing.

“We acknowledge the Federal Government’s intention to continue with current negative gearing arrangements; a sound decision in the context of low property market confidence,” he said.

“This Budget also deals with tough issues in our communities where real estate professionals are often in the front-line dealing with the implications,” Mr King continued.

“We welcome the increased funding for addressing domestic violence, youth mental health and suicide prevention.”

Next month the REIV will commence training for real estate professionals on dealing with instances of family violence to better equip our members on this important issue.

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Samantha McLean

Samantha McLean is the Co-Founder and Managing Editor of Elite Agent and Host of the Elevate Podcast.