'Whole lot of nothing': What the federal budget means for investors

It was hailed as the federal budget with housing as its centrepiece, but investors have been disappointed that it didn’t include any promises about a further review of stamp duty.

And while first-home buyers and downsizers can both be seen to be winners from Treasurer Jim Chalmers’ first budget, investors failed to win any significant concessions, despite a major shortage of properties to rent.

“I think, as a result, investors aren’t now talking about the budget,” says Matt Hayson, director of real estate agents CobdenHayson. “Their conversations are still focussed on interest rates and inflation. To them, the budget was a whole lot of nothing.

“But we are seeing more investors coming into the market as yields are improving – from 2 per cent last year to 4, 5, sometimes 5.5 per cent – and from now to six to eight months’ time is the opportune time to buy.

“Investors recognise that the market is offering better value and they’re seeing astonishing rental growth.”

The Agency co-founder Ben Collier agrees that investors are paying much more heed to softening prices and escalating rents at the moment than to anything contained in the budget.

“But currently there’s not a lot of supply, so there’s not a lot to look at in the sub-$5-million market,” he says. “In the market for homes over $5 million, there tend to be only those investors who are investing short-term and then planning to move in themselves.

“Budgets take time to sink in, though, and have an effect. It will be interesting to see if it has any impact on investors in the coming weeks and months.”

The budget included the ambitious plan to build a million more affordable homes over five years from 2024, with the announcement of a new National Accord set to bind the states and territories to review planning regulations, release more brownfield and greenfield sites and encourage private investment.

Improvements to housing prices and rental affordability will take a long time to work through the system, however, although downsizers will now have $300,000 they can contribute to super from the sale of their home from the age of 55.

Rising interest rates and inflation, in the meantime, may hamper some investor activity, although it’s considered a plus that the budget foreshadowed no moves to remove, or reduce, negative gearing.

Real Estate Institute of Australia president Hayden Groves says he welcomes the new home target but slams the lack of any action on stamp duty.

“It is an opportunity lost once and for all to deal with the wicked problem of stamp duty … which has been entirely and disappointingly omitted,” he says.

The lack of incentives for investors has also been lamented by valuer and Suburbanite principal Anna Porter, although she notes the $55 billion being spent on transport infrastructure and the $1 billion on regional infrastructure.

“Investors tend to follow infrastructure so they will tend to benefit, like everyone else, from that in the budget,” Porter says.

“So while there was nothing in the budget specifically to encourage investors, the measures to improve infrastructure and create employment will contribute to the stability and performance of their property, which can only be a good thing.”