There’s no doubt 2020 has been a difficult year on a lot of fronts, and property has been no exception.
Whether you’re an agent who couldn’t meet targets, a would-be buyer who lost your job, or a tenant who couldn’t make rent, there are few people who would call this year ideal for real estate.
But on Tuesday, 6 October, the Government delivered their delayed Federal Budget, with a clear aim to kick-start the economy after the extensive damage caused by Covid-19.
Among other initiatives, the Budget promises to:
- Bring forward income tax cuts, with those earning over $90,000 likely the biggest winners. The best news is taxpayers won’t need to wait long to see dollars in their pockets, with tax cuts to be backdated.
- Pay half the wages of 100,000 tradie apprentices, to help boost more rapid job growth.
- Deliver tax breaks for small businesses.
- Pay $200 per week to employers who hire people aged between 16 and 29 for more than 20 hours each week, or $100 for hires aged 30 to 35. New hires need to have been on JobSeeker to be applicable and commence employment between 7 October 2020 and 7 October 2021.
- Give cash payments of $250 in December and March to pensioners and disability carers.
Of note, the Government elected not to extend the Home Builder Scheme. This has come as a surprise to many industry commentators who projected an extension beyond December and an increase to the acceptable timeframe for work to be undertaken.
Just hours before the Budget was delivered, the Reserve Bank also announced interest rates would remain stable, at record lows.
Despite the lack of specific property initiatives, it is certainly not bad news for our industry, as many of the measures introduced can, and will have a knock-on effect across real estate.
Extension of first home buyer loan guarantee
Immediately prior to the delivery of the budget, the Government announced the extension of the First Home Buyer Loan Deposit Scheme to an additional 10,000 buyers, with the cap on purchase price also increased from $700,000 to $950,0000 in Sydney.
This allows first home buyers to purchase using just a 5% deposit, with the Government providing a guarantee for up to 15% of the loan.
In announcing this extension, the Government specified the additional guarantees will be applicable only to new-build homes.
“While certainly it is a shame this doesn’t equally apply to all property purchases, agents representing new builds, land developments and acreage should view this as an opportunity to market to buyers who can take advantage of what is a much more achievable deposit requirement,” said Sylvia Cortez, CEO of the EAC.
“With so many changes this year, but also so many initiatives and incentives, a big part of marketing should be education, so buyers understand the options available to them that can make purchasing possible right now.”
Incentives to start rebuilding real estate agencies
Like all industries, the real estate industry suffered notably during the worst stages of the pandemic, with open homes and auctions banned for up to several months, in some locations.
And while house prices across the industry don’t necessarily reflect this hardship, with Sydney and Melbourne dropping by only 0.3% and 0.9% respectively in September, and all other major cities increasing, it was absolutely felt at an office level.
“Conversations with agents throughout the worst stages of the pandemic revealed many looking to Job Keeper to try and retain employees, and unfortunately, many also letting agents go so businesses could survive,” said Sylvia.
But as businesses re-open and look to rebuild, Federal Budget incentives will cut the cost of hiring young people, aged up to 35.
“There’s no doubt this has been a hard year, likely with more challenges to come, but this initiative is a great opportunity for the industry to bring on some fresh talent and to rebuild our ranks with young, eager and energetic agents ready to learn and contribute.”
Positive market conditions for buyers
Though the pandemic may affect Spring listing volumes, buyers are in a relatively unique position compared to their counterparts of recent years.
Buyers, like most Australians, will receive tax breaks that mean more money in their pockets, they will benefit from record-low mortgage rates, and housing prices are either somewhat stable or have decreased slightly in Sydney and Melbourne.
“While challenges remain, we are hearing stories of enthusiastic and motivated buyers ready to take advantage of the current conditions. This presents a real opportunity for savvy agents to get out there, build their buyer lists and then knock on doors (figuratively, of course) to let potential vendors know, now is the right time to sell,” Sylvia commented.
“So many agencies decrease or completely stop marketing during tough economic times, but our most experienced veteran agents tell us – if you can – right now is the time to start marketing your brand and educating potential sellers about market conditions, rather than leaving them to newspaper headlines.”