Budget reaction: 'Lack of attention' to housing

by Rebecca Pike09 May 2018

As reaction comes through about last night's budget, the industry is "disappointed" to see no mention of housing issues. 

Treasurer Scott Morrison delivered his speech last night (8 May) with a huge focus on tax cuts and transport infrastructure spending. 

While some funding was given to the Pension Loan Scheme and the tax cuts might be beneficial in helping living standards, commentators say it was not enough.

HashChing CEO Mandeep Sodhi said, "I’m disappointed by the complete lack of attention that the Federal Budget gave to housing affordability. Last year’s measures, such as the Super Saver Scheme and the downsizing incentive for retirees, didn’t go far enough in terms of making it easier for buyers in Australia to purchase their first home. With more out-of-cycle interest rate hikes expected in the near future, stagnant wage growth and an ever-increasing cost of living, the government needs to commit to invest in helping individuals and families crack into the property market.

"The Open Banking framework is going to drive a lot of competition in the financial services space, and consumers will be the winners. We’ll see the biggest benefit when this framework includes lending products such as mortgages and credit cards, as this is the area where consumers stand to save the most by switching to another lender."

Real Estate Insititute of Australia's (REIA) president Malcolm Gunning noted the lack of discussion around housing affordability and supply, but said the budget did help in some way.

“Whereas housing affordability was a centrepiece of the 2017 budget there was nothing in this year’s budget that directly addressed this," Gunning said.

“It was however pleasing to see that the Government recognises the important role that 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."

Gunning said the budget’s approach recognises the state of the property market and the impact that APRA’s measures have had in cooling the marking particularly in Melbourne and Sydney and the Treasurer has seen no reason to make any further adjustments.

He added, “A boost to infrastructure spending, modest improvements in housing income for lower income earners, continued tax write-offs for small to medium business and growth in employment can be expected to be mildly expansionary, particularly for regional economies.

“The good news for home buyers is that the budget is not expected to put pressure on interest rates as inflation is expected to remain within the RBA’s target zone. 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 home buyers."

Beau Bertoli, joint CEO of small business lender Prospa, was also positive about the Open Banking scheme and about the support of the fintech industry.

Bertoli said, "Open banking paves the way for a fairer, more accessible financial system that puts control back into the hands of customers.

"It’s great to see the Government continuing to support and invest in Australia’s fintech sector. However, we had hoped to see some measures that would reduce the relative advantage enjoyed by larger banks. Promoting the ability of non-banks to access to lower cost wholesale funding would have fundamentally levelled the playing field in the finance industry. This would mean companies like Prospa could provide small business owners with even easier, lower cost access to finance, and create a more competitive finance market - something Australia badly needs"