Why More Should be Done for the Residential Property Investor Sector

The federal budget was revealed last March 29th, 2022, which prioritized a few housing schemes to regulate the cost-of-living pressures Australians are facing today. The housing schemes include the First Home Loan Deposit Scheme which was created to provide support for those who want to build their very first house soon. However, many are saying that the federal budget has completely overlooked one important sector.

The residential property sector has to receive as much support as it can get because Australia is in serious need of more rental accommodation, particularly in areas where there are zero vacancy rates. According to the national president of the Urban Development Institute of Australia, investors play a major role in providing homes for tenants, but since the housing supply is not enough to support the demand, it’s important that something has to be done about this.

As previously mentioned, the federal budget expanded the Home Guarantee Scheme with an additional 50,000 places to be covered for the next three years. This expansion aims to provide more for first-time home buyers, single parents, and at the same time those who have been wanting to enter the property market for years but just couldn’t do it before. The scheme offers a small deposit for new buyers – as low as five percent. This boosted the development of affordable housing.

While yes, the allotted budget for this particular scheme will benefit both owner-occupiers and investors in the long run, there are still challenges to face. Experts predict the likelihood of interest rate increases later this year and the next. The interest rate rise could possibly slow down the price growth in property markets, which could be challenging for many investors. The thing is, the opening of international borders, as well as the increase in migrants, will increase the demand for rentals, which the federal budget may have failed to consider.

The budget won’t be able to fix the planning system that could potentially deliver new housing, as well as provide support for providing infrastructure that could be built on land that could be developed in the future.

In addition to the housing scheme, the budget will also support measures such as cost-of-living support packages with tax offsets. Those with lower incomes may also enjoy the cuts to the rate of fuel excise, plus one-off payments which could definitely help boost the economy just like what incentives could do for small businesses. Right now, investors are enjoying the historically low-interest rates and the more relaxed lending protocols by banks in Australia. The price growth observed over the last two years has definitely been to their advantage.

The federal budget included both housing schemes and a budget for disaster relief. It was included to mitigate some of the costs of the floods. Lands are also rezoned in order to welcome new developments. Unfortunately, not enough infrastructure is there to support housing which is the bigger problem. Developers are calling in for the budget, but it was overlooked.

Building and construction provide 9 percent of GDP and 11 percent of full-time jobs in the nation. While it is true that housing affordability is a result of the lack of jobs, it’s also because of the lack of development-ready land. We must see more measures to improve the planning system to fast-track infrastructure building as well as streamline its approvals.