Budget 2016: What it means for investors, property market

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While tonight’s Federal Budget announcement is unlikely to contain any measures that will directly impact investors or the property market, it is still likely to be a significant one for the real estate sector.    

With the Coalition having retreated from the idea of making changes to the GST or negative gearing, the budget announcement is likely to bring a measure of stability, rather than upheaval to the sector.

“These days they generally seem to try and leak all the major points before hand so there are no big surprises. With negative gearing taken off the table by the Coalition there doesn’t look like being anything that’s going to have a huge impact on investors or the market,” Rich Harvey, chief executive officer of propertybuyer.com.au said.

“It looks like there might be some changes around super funds and contributions. The tax benefits of making contributions could be tightened and that could mean people have less money in those funds and won’t have the same opportunity to invest in property through super,” Harvey said.

Philippe Brach, chief executive officer of Multifocus Properties & Finance, agreed with Harvey that it’s unlikely there will be any real surprises in the announcement, however he believes changes to superannuation will have a different effect on the property market.  

“I do think there will be some tinkering around super and the contributions that people can make. Depending on the extent of any changes to allowable contributions and the tax concessions they carry, we might  an increase in market activity as people take the money they would have put into super and use it to directly invest in property,” Brach said.

“The government not touching negative gearing could also make property more attractive than super. If you have a situation where the government is chopping and changing then people can get disheartened, where as if there’s stability like it appears property will have that becomes more attractive,” he said.

While Brach believes the decision by the Coalition to not touch negative gearing is a positive one for the property market, Helen Collier-Kogtevs, founder of Real Wealth Australia, believes the government should clamp down on the tax break to benefit the wider economy.

“I think given where the economy is and our national debt is at, something has to give and the money needs to come from somewhere to help rectify the problem,” Collier-Kogtevs said.

While they both acknowledge it is unlikey to happen, Collier-Kogtevs and Brach do agree the budget should contain measures to assists first home buyers.

Collier-Kogtevs believes that should be done by addressing the issue of stamp duty, while Brach believes in a more direct mode of assistance such as re-introduction of a first home buyers grant.

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