The federal budget papers reference the housing downturn as one of the risk factors to the Australian economy. The housing and household sector is also referenced as critical to the state of the national economy. However, housing was largely missing in the spate of policy promises handed down last night.
“While the budget speech referenced housing a few times, in the sense that falling housing prices represent a downside risk to budget forecasts, there was in fact very little in the budget directly focused on the housing sector,” said the head of research and analytics at CoreLogic, Tim Lawless.
“With the performance of the housing and household sector so critical to the government achieving their forecasts and planned surplus, there is certainly an argument that more could have been provided in the budget to support these sectors.”
In particular, Mr Lawless took issue with housing affordability falling off the radar. It was a core feature of previous budgets handed down by the Coalition.
“The Treasurer reiterated that housing affordability was a key priority for the government, but it looks like the government is content to see housing affordability improve ‘organically’ via lower housing prices that could act as a contagion to weaker household consumption and a sharper than expected fall in residential construction,” he said.
“While this may seem a bit passive, it’s clear that housing affordability has improved substantially since the last budget due to lower housing values in the most expensive cities as well as the lowest mortgage rates since the 1960s and a subtle rise in incomes,” he said.
Knock-on impact: infrastructure spend
However, the government’s planned infrastructure spend across Australia will likely have an impact on property markets.
“Perhaps the most substantial area of the budget related to housing is a reiteration of the strong infrastructure spend and the City Deals, which will provide stimulus for specific regions of the country and help to cushion the downturn in residential construction,” said Mr Lawless.
“No doubt the strong infrastructure spend and investment in improving the key areas of Australia’s cities will be stimulatory for housing markets that benefit from the improvements. Tackling congestion and improving access to essential amenities should indirectly support housing affordability by making the most affordable regions of the cities more accessible and liveable,” he said.