The federal government has achieved a good balance between encouraging more housing supply and establishing policies that make housing more affordable in its 2017-18 federal budget, according to the Urban Taskforce.
“Federal Treasurer Scott Morrison has carefully balanced the need to boost housing supply with policy levers that make housing more affordable in this year’s budget,” said Chris Johnson, CEO of the Urban Taskforce. “To unlock housing supply, the budget allocates $1 billion for critical infrastructure along with $70 billion for transport infrastructure while working with the states to reform planning systems to speed up development.”
To encourage more affordable housing, the budget has increased the capital gains tax discount to 60% when private investment is made in affordable housing. “This will be a real incentive for the development industry to invest in this area particularly if the bond aggregator through the National Housing Finance and Investment Corporation is available to the private sector,” said the Urban Taskforce.
The non-profit also commended the proposal to encourage empty nesters to downsize from larger homes by allowing up to $300,000 from the sale of the home to be invested in a superannuation fund. The Urban Taskforce called the move a “good way to facilitate [the downsizing] process.”
“By not overacting in the areas of negative gearing and the potential to reduce capital gains tax reductions on property, the government has clearly understood the sensitivities in the role of investors in maintaining a viable rental housing market. To pull policy levers in an aggressive [manner] could lead to a devaluation in the main asset that many families rely on [i.e. their homes].”
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