There was little encouragement for homebuyers in the Federal Government Budget this week after speculations that the government would make changes to improve housing affordability and encourage house building failed to materialise.
Craig James, chief equities economist with CommSec expressed disappointment saying that the property sector is crying out for more units and apartments to be built. The rental vacancy rate is at record lows while rents are rising at the fastest pace in 16 years, but there are no new measures to improve housing affordability or to encourage more units to be built.
"The tax cuts will assist in meeting housing costs, but investors have nothing new to move them away from the share market to the property market," he said.
Despite the lack of budget help, the Reserve Bank of Australia's shift to a neutral policy on interest rates
, following a drop in inflation, will encourage investors to look more favourably on the housing sector.
CommSec's analysis was backed up by the Real Estate Institute of Australia (REIA) which said the government had missed an opportunity to address the 'critical social issue' of housing affordability.
Graham Joyce, president of the REIA, said: "There is much more that the federal government could have done in the budget to ensure Australians can afford to buy homes, and to purchase investment property, ensuring there's adequate stock of rental housing, and providing for self-funded retirement."
Joyce said that average loan repayments were taking up 32.5% of family income on average, more than in 1990 when interest rates reached 17.5%.
The REIA has suggested the government should appoint a federal ministerial portfolio for housing and establish a housing affordability forum. It also wants an increase in the First Home Owner Grant and a sliding scale for capital gains tax.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan