Australians have experienced sharp increases in their living costs since the last Federal Budget was delivered in March 2022, with inflation surging to levels not seen since the GST was introduced in 2000. Aside from this, the RBA has increased the official cash rate six times, increasing by 2.50 percentage points since May to 2.60%. During this period, commodity prices have contributed to higher GDP growth and unemployment has fallen to its lowest level since the 1970s.
This year’s Federal Budget aims to clarify and outline the priorities of the new Federal Government in its first term. As a result, the Australian economy is re-tasked with weathering the current and upcoming global economic challenges, resetting the budget from the policies and promises made by the previous government before the election.
A focus is placed on tackling living costs without adding inflationary pressures, with major spending commitments for families, health, aged care, housing, and the NDIS. Additional infrastructure projects, previously announced, are also included in the latest budget.
There is no measure in this year’s budget that will directly or substantially affect property markets in the second half of 2023. Considering these concerns, the announcement of a new National Housing Agreement between the Federal, State and Local Governments, institutional investors, and the construction industry will have a positive impact on increasing housing supply and creating new affordable housing. In the remainder of 2023, the budget does not include any measures that are likely to have a direct or substantial impact on property markets.
There are also a number of incentives to help older homeowners downsize, first-home buyers in regional areas and funding for a shared equity scheme to enable low- and middle-income earners to purchase a home. Indirectly, the combination of infrastructure commitments, policies to address cost of living pressures and improve wage growth are expected to boost spending, confidence, and investment which should feed through to local economies and suburban property markets.
Key takeaways
- Budget deficit of -$36.9b expected in 2022/23, down from -$78b in March.
- A new Housing Accord with a target to build 1 million homes
- A new $10b Housing Australia Future Fund
- Funding for the Regional First Home Buyer Guarantee
- $324 million allocated to the Help to Buy shared equity scheme
- Additional incentives to assist older Australians downsize
- An additional $8.1 billion in road and rail infrastructure spending
- More fee-free TAFE and university places to tackle the skills shortage
- Cheaper Childcare for 1.26 million families
- An expansion of the Paid Parental Leave scheme to 26 weeks