To quote Federal Treasurer Josh Frydenberg “this budget is all about jobs”. The Morrison Government has committed to spending huge amounts of money across multiple sectors to boost business and consumer confidence.
Income tax cuts, instant asset write-offs for businesses and the JobMaker scheme are just a few of the latest incentives that will get the economy moving again in the first half of 2021.
And the stimulus is sorely needed, with economic forecasts predicting the Australian economy will contract by 3.5% this calendar year with Victoria feeling the impact at 7%, due to the coronavirus-driven recession.
Corelogic also predicts that the overall Australian market dwelling prices will drop by 5% between 2020-2021 with Melbourne facing the biggest decline of up to 7%.
A reduction in net overseas migration over the next few years means that our population growth will be at its lowest level since 1946, taking more than four years to recover to pre-pandemic levels, as revealed in the budget on Tuesday.
Victoria’s migration boom is now non-existent and it is having a direct impact on the housing market. Foreign students who rented apartments in the city or near universities have not returned. Investors with vacant properties are having to drastically reduce rents and provide rent-free periods to attract tenants. Overseas migrants were purchasing or renting homes in key growth areas of Melbourne and regional Victoria, but now they cannot enter the country.
Melburnians are also flocking north to Queensland – where migration rates for the capital Brisbane are at a national high.
And we are still waiting to see the exact outcome deferred mortgage repayments will having on the housing market and overall economy. There is more than $180b worth of home loans and $55b in business lending on hold, according to Westpac Group.
No lending institution wants to be the first to start foreclosure on clients and banks will undoubtedly work with lenders to find viable loan repayment scheme.
If there is an urgent need to sell, vendors should seek out their local agents and brokers and understand how they can transact on their own terms.
But the removal of the responsible lending guidelines may help keep the market buoyant amid the doom and gloom.
Westpac is reporting a slight uplift in lending to first-home buyers, upsizes and investors, who will soon be less scrutinized by the banks and armed with more purchasing power.
According to Vicky Devine, CEO of Mortgage Express, “there is strong appetite in consumers preparing for post-pandemic purchasing, specifically from first-home buyers and upsizes, as we reassess our working conditions (flexibly from home to office) and family values”.
She predicts that families will take advantage of conditions and make the move, seeking out more space and the ability to ‘isolate’ comfortably. .
Homeowners will also take advantage of record low interest rates and further predicted cuts in November.
As the government pours financial stimulus back into Australian pockets, it will be interesting to see how many people choose to save or spend.
But analysis aside, the bullish budget hinges on an essential ingredient – access to a coronavirus vaccine. Here’s hoping this crucial cure is found very soon.