Blind Freddy can tell that how much we have in our pay packets will impact on property prices. This week’s budget statements from both parties will have significant impacts on what we take home from work and what we can afford for our homes.
According to the Australian Bureau of Statistics (ABS) average hourly worker wages grew by just 0.55 per cent in the December quarter last year, leaving the change on a year earlier at a paltry 2.08 per cent — barely ahead of inflation.
The news was particularly dire for private sector workers — the largest cohort in the country — whose wages grew by just 1.93 per cent over the year, below the relatively-brisk 2.37 per cent pace enjoyed by their public sector compatriots.
Thankfully the tax cuts offered in this week’s budget offerings from both parties may well give us, especially those earning below $90,000, wriggle room with the household budget.
The Coalition’s tax plan would see low- and middle-income earners receive end-of-year rebates of up to $530 starting from next financial year.
While Labor supports this part, it would also introduce far more sweeping changes down the track, to flatten the tax system to address bracket creep.
The Opposition has outlined a plan to start its package from 2019-20, which will almost double tax benefits for those earning less than $125,000 a year.
It would deliver rebates of up to $928 to those earning between $50,000 and $90,000 — which almost doubles the Coalition’s commitment.
While this may imply Labor’s policies will be a stronger stimulant to the property market, counterbalancing it, it has reiterated its commitment to limiting negative gearing to new properties only and to restricting Capital Gains Tax discounts to investors.
Generally, there wasn’t much focus on housing from with party which implies the world has moved on. Right now, we are in a Goldilocks environment – not too-hot, not too-cold. And with tax cuts offered from both sides, it looks like the housing market will simmer along nicely for some time.
If you want to discuss your property and finance needs, please feel free to contact me on 1300 30 67 67