Housing affordability was one of the key topics in this year’s budget. First-home buyers are now able to tap into superannuation savings to fund a deposit and, from July 2017 onwards, can contribute up to $15,000 a year subject to a total cap of $30,000.Retirees looking to downsize their homes are among the list of winners. Up to $300,000 of the proceeds of selling the family home (for those aged 65 and older) can now be invested into super as a non-concessional contribution. The government hopes that, by encouraging retirees to downsize their family homes, more housing will be freed up for families impacted by an overheated property market.
The budget delivered some positive news for Australian construction companies as the government set out commitments to fund large-scale infrastructure projects with a focus on airports, roads and rail. Amongst other projects, it will inject $5.3 billion into a new Western Sydney Airport Corporation, which is set to create between 20,000 and 60,000 new jobs for the industry.
Australia’s five big banks are set to bear the burden of the budget deficit. From July 2017 onwards, big banks will be struck with a quarterly levy of 0.015% of their liabilities, raising an estimated $6.2 billion. Treasurer Scott Morrison says this is an “additional and fair contribution from our major banks” that will even the playing field for smaller banks.
The budget brought bad news for foreign property investors who will, with immediate effect, will be charged capital gains tax on their personal properties and be penalised for properties left vacant. Students and tax payers also topped the list of losers. Higher education is set to undergo a radical facelift with a 7.5% hike in course fees. There will also be a 0.5% increase in the Medicare Levy across the board.
To hear more from Shane Oliver and a team of experts on what the Budget means for investment markets, go to AMP Capital’s 2017-18 Federal Budget page.
About the Author
Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital is responsible for AMP Capital’s diversified investment funds. He also provides economic forecasts and analysis of key variables and issues affecting, or likely to affect, all asset markets.