What’s in the 2023 Federal Budget for property investors?

The recent surge in the export value of Australia’s resource and energy commodities combined with our historically strong job market, has helped to deliver an economic surplus, the likes of which we haven’t seen in this country for at least 15 years. This has resulted in the Federal Government presenting a raft of new initiatives that will directly impact Australia’s housing supply and those invested in real estate alike.

In this article, we’ll be taking a closer look at the measures outlined in the Federal Budget, and how they will affect property investors in the immediate and long term.

Population Growth

“The real story of this budget is the five-year net overseas migration (NOM) total of almost 1.5 million people out to 2027,” said Mike Zorbas, Chief Executive of the Property Council of Australia.

According to the latest projections, the number of people migrating to the country from overseas is expected to be 400,000 in 2022-23 and 315,000 in 2023-24, which is higher than the previous projection of 235,000 made in last October’s budget. This increase is due in large part to the Government’s efforts to recover from the impact of the pandemic.

Population growth is a key driver of demand for property and associated services. The 2023 Federal Budget provides a much-needed stimulus to the Australian economy which will help to increase job opportunities, attract immigrants and provide accommodation for new Australians.

Housing Supply

One of the key initiatives announced in the Budget is an injection of around $15 billion into the housing market, with a particular focus on promoting the expansion of build-to-rent (BTR) housing and enhancing the supply of new homes. The Budget’s focus on finding relief from rising cost-of-living pressures and investing in infrastructure and housing supply is sure to have a medium to long-term positive impact on housing prices. The resulting increase in construction activity and availability of housing supply, will not only ease affordability but also create employment opportunities and support economic activity.

The Property Council also expects that upcoming public policy will involve offering a 10 percent tax rate incentive to both local and foreign investors who include affordable housing for “Key Workers” in their build-to-rent projects. These properties will then be offered for rent at a discounted rate for key workers such as teachers and emergency service personnel.

The government will also provide an additional $2 billion in investment for more social and affordable housing through the National Housing Finance and Investment Corporation (NHFIC). The additional financing will enable NHFIC to offer community housing providers finance at lower costs and for longer terms, thereby helping to increase the supply of affordable housing.

The bottom line for property investors

This is truly exciting news as this anticipated policy is set to revolutionise the landscape of affordable housing and provide incredible opportunities for investors. Taking advantage of this tax incentive could be a huge boost for investors and help to secure their future in the real estate industry.

Property investors can reap numerous benefits from investing in the build-to-rent sector. The stable occupancy rates and longer lease agreements associated with affordable housing provide property investors with consistent rental income and reduce turnover costs. The government’s policy could also help to bring down the overall cost of buying and maintaining a BTR property, further increasing yield potential as well as the potential for capital growth

Final thoughts

Managing Director of Market Economics, Stephen Koukoulas, has called the 2023 Federal Budget. “A good budget for difficult times.”

And he’s right.

While the downturn in the property market now appears to be behind us, the government’s proposed changes to affordable housing could be beneficial for investors looking to capitalise on the current conditions. Not only will it help create more housing stock, but it could also result in increased yields and capital growth.

Ultimately, the government’s proposed policy changes could lead to improved affordability and greater housing supply, benefiting both investors and first-time home buyers alike. With the right financial advice and carefully considered investment strategies, investors could capitalise on the current conditions and make a long-term return on their property investments.

Whether you’re a first-time buyer or a seasoned investor looking to grow your portfolio, at Ironfish we can help you understand the implications of the 2023 Federal Budget and how you can make the most of upcoming housing policy changes.

With our expert guidance and the latest research-backed strategies, you can invest with confidence in all the major cities across Australia. And with our one-on-one support, you’ll never feel in over your head.

Contact us today to learn more about how Ironfish can help you make the most of your property investment journey. We look forward to helping you build your future.