Treasurer Josh Frydenberg recently made the federal budget 2019-2020, which, according to the Australian Property Council, relies heavily on a healthy housing market.
"It's a budget for growth, but behind every budget figure lies the unknown effect of slowing housing. Surpluses, infrastructure and tax breaks are welcome, but falling real estate prices are clearly the Treasury's white card, "said Ken Morrison, president of the Property Council of Australia.
Given the uncertainty of things, the government and Parliament must focus on the housing sector and have a contingency plan if these forecasts are not met, according to Morrison.
Budget documents highlight the downside risk of further housing price declines related to housing investment and household consumption. If consumption decreased by 1%, GDP growth would be reduced by a quarter of a percentage.
The Treasury declared that investments in new housing would grow by only 0.5% this year, before decreasing by 7% in 2019-2020 and an additional 4% in 2020-2021, once existing projects completed.
"The Australian housing sector is worth $ 7 trillion – more than twice the size of the stock market – thus declares Treasury [is] the right to report risks to the economy. It also reinforces our warnings about the impact of the negative tax changes on debt and conversion, especially in this uncertain period of the property cycle, "Morrison said.
In addition, the budget highlights the strong contribution of the real estate industry to the recovery of investment from non-mining companies – up 9.7% in 2017-2018 compared to annual growth average of 1.5% recorded over the previous decade.
Investments in non-residential buildings have strongly boosted business investment, especially in hotels and senior care facilities, while office building activity has also increased in 2017-2018 .
Finally, the budget provided for a sharp increase in infrastructure spending, which was also welcomed by the real estate council.
"The budget provides an investment of $ 100 billion over ten years to meet the needs of our growing cities and regions, including projects to reduce urban congestion and improve regional relations," Morrison said. .
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