Federal budget should help commercial property sector
The federal budget should deliver a boost to the commercial property sector, despite providing no specific financial aid to the property market, economists say.
REA Group Executive Manager – Economic Research, Cameron Kusher says that although the commercial property market was left out of Tuesday’s budget, other budget inclusions will have flow-on effects for commercial property as it seeks to rebound from COVID-19.
Sweeping tax cuts are a key pillar of the Morrison Government’s financial plan, with both individuals and businesses to receive significant tax concessions in a bid to get the economy moving.
“The federal budget was all about getting people back to work and getting people out spending, and certainly if that’s successful, that should really help the commercial property sector,” Kusher says.
“There’s already stimulus in place and if you can get people back working, that should be positive for the property sector, whether that be housing or commercial property.”
“I would say the biggest winners were lower income earners that have got bigger tax cuts brought forward and backdated to the beginning of this year.”
Retail property has taken arguably the biggest hit during the pandemic, with thousands of shops forced to close nationally under lockdown regulations and huge numbers of Australians out of work.
Federal Budget 2020: Top takeaways for businesses and commercial sector
Cameron says the tax cuts should help kickstart retail.
“If people are going to go out and spending more money, that will obviously help the retail sector,” he says.
Central to jobs growth was the announcement of the JobMaker scheme, which aims to create 450,000 jobs for younger people by funding businesses to hire them.
Businesses that hire anyone aged between 16 and 30 will receive $200 a week towards their wages, while any business that hires someone aged 30 to 35 will receive $100 a week per worker.
Kusher says the return of hundreds of thousands of people to the national workforce would have an automatic impact on commercial property.
“There’s now a lot of incentives for businesses to put on more staff, particularly younger staff. There’s some wage incentives for them to employ people under the age of 35,” he says.
“If people are going to start putting on more staff, that will help the industrial sector and the office sector, so whilst there’s been nothing specific for the commercial property sector (in the budget), getting people back to work, getting people spending should have a positive impact on those markets.”