Scott Morrison’s 2017/18 Budget passes the test for fairness and responsibility whilst offering some innovative opportunities that will support and encourage affordable housing for those most in need, according to Andrew Cocks, Managing Director of Richardson & Wrench, Australia’s oldest real estate group.
Mr Cocks said the Treasurer had outlined a number of measures that would directly assist first home buyers saving for a deposit while encouraging established home owners approaching retirement to down-size by allowing them to make deposits of $300,000 into their super funds from the proceeds.
“Overall the Treasurer has crafted a careful plan for housing that addresses supply side factors without taking drastic measures that would undermine confidence or investment in housing,” said Mr Cocks.
“He has provided a means for first home buyers to accelerate savings through voluntary contributions to super taxed at 15 per cent. In practice, these tax concessions will only benefit those first home buyers on higher incomes or who are looking to purchase in areas where average property values have not escalated at the stellar rates seen in our biggest cities. However the reality is that even the well-paid are struggling to buy a first home in Sydney and Melbourne.”
Mr Cocks welcomed the measures to increase land supply in Melbourne and Sydney and the contribution of $1.3 billion towards a new National Housing Affordability agreement with States and Territories, which in conjunction with a likely increase in affordable housing through long-term, low cost finance, is the most significant package of initiatives targeted at this largely ignored and growing area of need in our society.
“This will keep up the pressure on State and Local governments to meet supply targets, essential to any long-term solution to housing affordability,” said Mr Cocks.
Mr Cocks said the 60 per cent capital gains tax discount to investors in affordable housing was a necessary measure to encourage the private sector to participate in meeting the growing need for housing amongst the low-paid and welfare beneficiaries.
“As the Treasurer pointed out there are no silver bullets for affordable housing and while first home buyers are locked out of home ownership there will be more demand for private rentals, making it even harder for those already struggling with cost of living pressures.”
Despite calls for the Treasurer to make changes to negative gearing in the Budget, and aside from the changes to some deductions, his reluctance to do so was a sensible approach, according to Mr Cocks.
“The people making the most noise about negative gearing need to look at the property landscape outside beyond Sydney and Melbourne,” said Mr Cocks. “It’s a different story in regional Australia and Mr Morrison has wisely decided to maintain certainty in the current property tax arrangements that apply across the country. I agree with the Treasurer that a scalpel rather than a chainsaw has been applied where needed.
“No Budget will ever win universal approval but the Treasurer has laid out a reasonably well-considered plan for the Federal Government to do its part in tackling housing affordability. It’s not a solution by any measure; that lies in the hands of State Government to deliver.”