Australian housing has been on the minds of politicians for quite some time, and so it’s no surprise that the 2017 Budget is taking “prudent steps” to better align incentives with improved housing outcomes.
Delivered on May 9, 2017, the budget has outlined a two pronged strategy that aims to both encourage young people into the market, while providing incentives for the older generations to sell over sized family homes and downsize.
Downsizers aged 65 and over can make non-concessional contribution of $300,000 to superannuation from the sale of a principal place of residence held for more than 10 years. This will encourage those home-owners, retirees or empty nesters holding onto their family homes to make a decision to sell their properties and downsize.
The Herald Sun predicts the potential of around 50,000 properties coming onto the market. Tim Molloy, Console Group CEO anticipates that the impact of this influx will be twofold, stating “I think the changes will both help ease prices for the younger generation wanting to enter the market and also provide opportunity for investors to increase their portfolios.”
Console sees a number of possibilities as outcomes to the budget, and how it will affect change in the rental property market;
- An increase in rental opportunities for young people who have previously been unable to move out of home and into the rental market
- A reduction of competition in the rental market due to an influx of rentals, and
- An increase in overall properties under management as owners decide to rent rather than sell
There is also potential for disruption in the property sales side of the market, which could see;
- An increase in sales as downsizers make contributions to superannuation for their future rather than holding on to a rental property, and
- A decrease in house prices as downsizers flood the market
Regardless of the how the changes affect either the rental or sales property markets, we can say for sure that the downsizing incentive coupled with the first home-owner superannuation incentives will certainly cause a shift in homeowner demographics across Australia, and shake up the industry as a whole.