Budget 2018 – Changes For Property Buyers And Sellers

The 2018 Budget will bring many changes for property buyers and sellers. Some of the new changes tabled in the May Budget will likely have an indirect effect on both the residential and commercial property sectors.

Gavel sitting on a book

Stable Interest Rates

The Budget will more than likely mean that interest rates will not be an issue, as the President of the Real Estate Institute of Australia Malcolm Gunning says: “This expected interest rate stability comes at a time when housing prices in some of our major cities are showing signs of easing, leading to improved affordability for first homebuyers.”

Negative Gearing Will Remain The Same

The government has decided that there will be no change to negative gearing, which has brought some relief from the real estate and development industries. Gunning described this as an ideal outcome for the housing market, considering the stringent lending changes introduced last year to quell investor demand.

“[It was] pleasing to see that the government recognises the important role the current taxation arrangements for negative gearing and capital gains tax play in increasing supply, keeping rents affordable and easing the burden on social housing by leaving these unchanged” he said.

More Land Available For Housing

The Budget will help with the release of more land suitable for housing. This means that there will be more land to build more homes as the budget plans to establish a $1 billion National Housing Finance and Investment Corporation.

There’s also a need to reduce “land banking” by some investors. This occurs when investors hold on to land in the hope that its value will rise while simultaneously enjoying tax benefits granted on the basis that the land would be used for homes or commercial buildings. Under the new Budget, the government has taken steps to discourage investors from holding on to land that could be used for new homes, to commence in July 2019. This means that investors will no longer be able to claim expenses for vacant land that could be used for housing or other development, and these include expenses such as council rates and maintenance costs.


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Cheaper Housing Will Be More Easily Accessible

For some, cheaper housing located outside of the major cities is not an easy option, particularly for those who work in commercial centres. Part of the government’s solution to this problem is by allocating billions of dollars in transport infrastructure upgrades, and it’s aim is to resolve this problem over the longer term.

Projects designed to attract homebuyers into less expensive areas include upgrades to roads on the Gold Coast, the North South Rail Link in Western Sydney, the Melbourne Airport Rail Link and continuing upgrades to the Bruce Highway in Queensland. Nationally, there are also plans to reduce the congestion to help ease the hectic commute from the suburbs.

Australians Can Age At Home

In the 2017 Budget, the government introduced the “Downsizer Contribution” so that, from July 1 2018, homeowners over 65 will be able to invest up to $300,000 from the proceeds of the sale of their family home into their superannuation fund. The Budget introduced a measure designed to help retirees stay where they are. The move could also be seen as encouragement for singles and couples to sell, freeing up more family homes.

Now every homeowner over the age of 65 has the option of taking out a reverse mortgage worth up to $11,799 a year for the rest of their lives.

A reverse mortgage is effectively a loan that allows homeowners to access the equity they have built up in their home without selling their property. The loan is usually repaid when the house is eventually sold.  There are limits in place to prevent people from owing more than their property is worth. Speak to your mortgage broker about the recent Budget and how it could affect you if you are considering buying, selling or taking out a reverse mortgage in 2018 or 2019.


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