Australia Budget & Housing Market (with Haidi Stroud-Watts; Shery Ahn)

These policies are intended to create a redistribution in the housing market. Do you think that needle can be threaded?

Haidi Stroud-Watts

Amy Auster

The changes to the CGT discount for property were not a surprise. What did surprise people was the broader application across any capital gain, which affects small business and the venture capital sector.

There is now a lot of work being done to figure out how to take that forward. We'll see further discussion as the legislation gets released.

Amy Auster

The impact on the property market is probably relatively muted. The changes are grandfathered for existing properties. Models indicate not a huge impact on turnover or prices, but more on the mix of investor vs. owner-occupied properties.

There are many other things happening in the property market, including the RBA's rate rise cycle. What we wanted to see was more effort on the supply side to create more housing.

Do you worry about the sentiment impact, given potential global shocks on the horizon?

Haidi Stroud-Watts

Amy Auster

It's hard to bet against the Australian property market. When sentiment is weak, we tend to see prices track sideways and volumes drop, because owners don't want to sell at a discount.

We've been through periods of rate tightening before where prices track sideways for a while and then start to rise again. We very rarely see prices decline.

Does this budget signal a more open Australian government to foreign investments?

Shery Ahn

Amy Auster

There was some really good news for business in this budget. There is a commitment to a maximum 30-day turnaround time for foreign investment applications and to streamline approvals.

There were also measures to improve regulatory practice, deregulate, and streamline tax compliance. So there is quite a bit for business to like in this budget.

Amy Auster

The budget stabilized the deficit and gave significant space to productivity reform, which is positive. Reforms include occupational licensing and better use of the skilled migrant visa.

These micro-reforms add up to make it easier to do business in Australia.

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