What the Budget Means for Queensland Property
On Tuesday, 6th October, Treasurer Josh Frydenberg delivered the highly anticipated mid-pandemic federal budget for the 2020-2021 financial year. To be expected, some aspects were praised, while others were criticised. Here’s how it stands to affect the property market in Queensland.
The First Home Loan Deposit Scheme
The First Home Loan Deposit Scheme (FHLDS), which previously provided loan assistance to 20,000 first home buyers, has been extended by an additional 10,000 places. In an effort to promote residential construction, the new grants will only be available to those building a brand-new home, or building their own.
While established housing tends to be more popular than new builds, the success of the HomeBuilder scheme should provide hope that these new 10,000 FHLDS places will prove popular. That could be good news for Queensland. HomeBuilder was particularly popular in Queensland, where private sector house approvals rose 13.9 per cent month-on-month to August. If that trend continues, Queensland can expect to make up a significant portion of the 10,000 FHLDS place, bested perhaps only by Western Australia whose approvals rose by 34.9 per cent.
Affordable Housing and Help for Indigenous Australians
Two other budget inclusions that directly affect property are a $1 billion commitment to the National Housing Finance and Investment Corporation (NHFIC) to build affordable housing, and a $150 investment towards Indigenous Business Australia’s Indigenous Home Ownership Program (IHOP). The boost to the NHFIC is welcomed, but given Queensland’s relative affordability, it seems unlikely we will receive a significant share of the $1 billion. However, it could have an effect.
The IHOP investment is slated to construct 360 new homes across Australia. Even given Queensland’s relatively high proportion of Aboriginal and Torres Strait Islander People (4.0 per cent against the Australian figure of 2.8 per cent1), it’s unlikely our State’s share of those properties will be so much as a blip on the radar. This isn’t to suggest the investment is unnecessary or unwelcomed though. IHOP is less about bolstering economy and more about helping Indigenous Australians generate intergenerational wealth – a worthwhile initiative.
The budget includes a lot of investment into infrastructure – $14 billion to be spent over the next four years. How direct an impact this will have on property is difficult to call, as most of the construction is in rail and roads with a further $110 billion going towards the government’s 10-year transport infrastructure investment pipeline. As a result, Master Builders Queensland believe the budget “misses the mark”.
“Unfortunately, these aren’t the projects that will provide a shot in the arm for commercial builders, who are definitely languishing in Queensland,” said Deputy CEO Paul Bidwell. “It’s evident that the federal government has favoured tax cuts to stimulate the economy over direct investment, which now puts pressure back on the Queensland Government to support commercial builders in our State.”
With HomeBuilder coming to an end at the end of 2020, a lack of commercial investment could be a one-two punch for Queensland’s property sectors if the State Government can’t take up the slack.
JobMaker and JobTrainer
Keeping the JobSomething brand alive, the two initiatives announced in the budget – JobMaker and JobTrainer – aim at getting unemployed Australians back to work.
The first, JobMaker, is a $4 billion investment that will reward employers up to $200 a week if they hire an eligible person aged 16 to 29 years, or $100 if they hire someone aged 30 to 35. The scheme is expected to support around 450,000 positions. The plan also includes lower personal income taxes, an extension of the instant asset write-off threshold for businesses, and a $1.2 billion Boosting Apprenticeships Wage Subsidy package. The package stands to provide employers a 50 per cent wage subsidy should they hire a new apprentice or trainee.
JobTrainer also falls under the larger JobMaker umbrella. It’s a $1 billion initiative allowing Australians to access up to 340,700 free or low-fee training places, so they can retrain or upskill in sectors with increased job prospects. Lower unemployment and higher job security results in consumer confidence which is a major factor in property market health, making these positive initiatives.
Master Builders Queensland welcomes the schemes, but worries it won’t be enough to incentivise hiring if there’s not enough infrastructure development. “No matter how cheap someone is to put on as an apprentice, if there’s no long-term work you won’t be able to put them on,” says Dyan Johnson, Manager of Policy and Economics at Master Builders Queensland. “We’ve got this rush now, but what does next year look like, and can you commit to a four-year apprenticeship?”