Impact of the 2024-25 Federal Budget on Property Prices and Stock Levels in Australia

Enhanced Borrowing Capacities: A Game-Changer

For the team at Rose and Jones and myself, the primary focus is the anticipated boost to borrowing capacities for homebuyers. The proposed tax cuts, set to bolster take home pay for typical taxpayers, promise significantly increased financial resources. This translates into heightened purchasing power, potentially reshaping the dynamics of the Sydney property market.

The projected tax cuts, outlined in the budget, are expected to provide substantial relief across various income brackets. For instance, individuals earning $100,000 stand to benefit from an annual tax cut of $2,179, while those earning $150,000 could save $3,729 per year. These tax savings are anticipated to directly enhance the borrowing capacities of homebuyers, enabling them to access higher loan amounts and expand their property investment opportunities.

Direct Implications for Property Prices

From the perspective of a buyer’s agent deeply entrenched in the Sydney property scene, the impending tax cuts signal a potential surge in property prices. As homebuyers find themselves empowered with greater affordability, there’s a likelihood of heightened demand across various segments of the market. Consequently, this surge in demand could exert upward pressure on property prices, especially in segments catering to first-home buyers and more affordable housing options.

Stimulating Market Momentum

For Rose and Jones as a whole, the budgetary provisions represent a catalyst for renewed market activity. The proposed tax cuts are poised to inject fresh dynamism into the property market, particularly at the entry level. First-home buyers, a demographic facing formidable challenges in entering the market, stand to benefit immensely from the enhanced affordability facilitated by increased borrowing power. This, in turn, could invigorate market momentum and drive greater transaction volumes.

Reviewing Housing Initiatives

The unveiling of the 2024-25 Federal Budget has brought housing to the forefront of policy discussions, aiming to address pressing challenges while capitalizing on opportunities within the real estate sector. Here we review the hits and misses concerning housing initiatives, identifying areas ripe for improvement.

What the Budget Got Right on Housing

The Budget rightly acknowledges the strain placed on low-income households by escalating housing and rental costs, particularly in the aftermath of the pandemic. With social housing on the decline, vulnerable demographics are increasingly exposed to the vagaries of the private rental market. To combat this, the Budget allocates substantial funds towards crisis accommodation, social housing, and rental assistance.

Missed Opportunities and Areas for Improvement

  1. Commonwealth Rental Assistance Optimization: While the Budget boosts CRA, it misses an opportunity to optimize payments by ensuring they are well-targeted.
  2. Boosting Construction Capacity: The construction sector faces significant challenges, including project delays and supply chain disruptions. While the Budget allocates funds for workforce training, a more robust strategy to enhance construction productivity is needed.
  3. Demand-Side Measures: The Budget overlooks opportunities to shape housing demand through tax reform and policy interventions.

Final thoughts

The 2024-25 Federal Budget represents a significant step towards addressing housing challenges in Australia. While commendable efforts have been made to support vulnerable populations and stimulate housing supply, there is room for refinement and strategic revaluation. By optimizing existing initiatives and exploring innovative policy measures, policymakers can foster a more equitable and sustainable housing ecosystem, driving positive outcomes for both homeowners and renters alike.

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