Budget Does Nothing To Allay Real Estate Fears

Media Release 11 May 2011

First National Real Estate, a network with over 450 offices throughout Australia and New Zealand, says the Australian Federal Budget provides no measures to address issues facing the Australian property market. It fails to tackle government obstacles faced by developers, the shortage of land releases, excessive taxation on new housing or the fears surrounding a climate of rising interest rates.

Chief Executive Ray Ellis said doing nothing to remove government impediments to development would assure that housing affordability only continues to worsen.

‘The Federal Treasurer continues to ignore calls to reform inefficient taxes like stamp duty and does not understand talking about ending negative gearing will effect the very working families this government has sworn to protect’ said Mr Ellis.

‘Investors have been slow to return to the property market and ending negative gearing or adding investment property exit taxes, as the Treasurer has suggested, will see them leave the market, possibly for good. The shortage of investment property ownership is already showing up directly in rapidly rising rents. Rents have surged by 7.6 per cent in New South Wales and by 6.5 per cent in Victoria in the year to March. That hits the people hard who can least afford it, working families who rent’.

First National Real Estate indicated that with expectations of falling unemployment, not enough is being done to curb inflation or wages growth. This is likely to force the Reserve Bank’s hand on interest rates sooner, further damaging investment in a climate where the rising value of the Australian dollar is encouraging offshore investment.

‘Without decisive action to coordinate government authorities, we are no closer to solving the supply problems that force up housing prices and lock out young buyers. Without incentives for investors, we are no closer to improving the supply of more affordable rental properties. With a Reserve Bank with a finger on the trigger for the next rate rise, we see trouble for the one in ten mortgage holders who say they will not be able to make their repayments if interest rates rise by another quarter of a per cent’ said Mr Ellis.

Issued by: First National Real Estate

For further information,
National Communications Manager, Stewart Bunn, 1800 032 332