This time last year, we were supposed to have a federal budget – instead, we had a pandemic.
And over the year many elements of our life were upended due to Covid19
Around this time last year, our Prime Minister Scott Morrison said he’d build a bridge for us to get to the other side and it seems he did.
The government threw everything it could, including billions of dollars at creating jobs and keeping our economy moving and it succeeded.
And it’s still if you look at the federal budget handed down by Treasurer Josh Frydenberg and you’d think it was still raining money. 
Never before has a budget done so much to supercharge the economy after the worst of a recession has passed.
The underlying message from this pandemic budget is that while our recovery is running apace, the economy still remains fragile and unable to stand on its own two feet.
The government has no option but to continue spending, and it has given the green light to a number of initiatives to ensure our economic recovery continues.
We learned that taxes on company profits and personal income are driving a revenue bonanza in Canberra.
So what kind of treasurer could resist spending some of that, given ultra-cheap borrowing costs and an election campaign expected within a year or so?
In today’s Property Insider video I chat with Dr. Andrew Wilson, Australia’s leading housing economist, about some of the impacts of the budget on our property markets as well as some of the important economic data that has been released over the last week as it relates to property.
Auction results remain strong
Auction clearance rates remained strong last weekend, which was the second busiest auction weekend of the year so far and the busiest May auction weekend on record.
Watch this week’s video as Dr. Wilson gives his thoughts on the pulse of the property market.
He explains how Sydney’s high autumn clearance rates remained unaffected by another record surge in auctions at the weekend with the more boom-time results recorded.
Although auction clearance rates have faded marginally compare to the unprecedented results recorded in March, the market clearly main remains in favour of sellers with upward pressure on prices continuing from strong buyer competition, now increasingly fuelled by investors.
Dr. Wislon also discusses how Melbourne produced another boomtime clearance rate on Saturday, again unaffected by another surge in auction numbers.
Melbourne again reported a month high weekend auction clearance rate of 80.7% – marginally higher than last weekend’s result.
Melbourne recorded the median price of $1,050,000 for houses sold at auction on the weekend which was 4.9% higher than that recorded last weekend.
The Budget:
Booming iron ore exports have delivered a bumper company tax take over the March quarter, with the budget’s bottom line improving by $30bn since the mid-year economic and fiscal outlook in December.
And our economic recovery is likely to continue, underpinned by strong household spending supported by the further lifting of activity restrictions, increased confidence as general and certainty reduces, and the world effects from higher housing prices.
While almost everyone seemed a winner in this year’s Budget some of the property-related initiatives watch this week’s video as Dr. Andrew Wilson and I discuss some of the following initiatives.
- The establishment of a Family Home Guarantee
This will allow single-parent families to purchase a home with a deposit of as little as 2 per cent.
- Expansion of the New Home Guarantee
An additional 10,000 places in this 5 per cent deposit scheme will be created, to carry on from the success of the program’s first year.
- An increase to the First Home Super Saver Scheme
This will see the maximum amount of voluntary contributions which can be released under the scheme lifted to $50,000 from the previous $30,000 cap.
- Downsizers
Australians over the age of 60 who downsize their family home have rewarded by being able to contribute $300,000 to superannuation ($600,000 for couples) in this year’s Budget.
This scheme was previously only available to Australians over the age of 65 and the thought process behind this is that this will free up more housing stock for younger families.
- Infrastructure spending
The Treasurer confirmed the government is spending $10 billion over 10 years on a number of major infrastructure projects, including:
- $2 billion initial investment for a new Melbourne Intermodal Terminal for the transfer of freight
- $2.03 billion for Great Western Highway Upgrade – Katoomba to Lithgow – construction of east and west sections in NSW
- $400 million for Inland Freight Route (Mungindi to Charters Towers) upgrades in Queensland
- $161.6 million for the Truro Bypass in South Australia
- $160 million for Agricultural Supply Chain Improvements – ‘Package 1’ in Western Australia
- $150 million for National Network Highway upgrades (Phase 2) in the Northern Territory
- $80 million for Bass Highway safety and freight efficiency upgrades in Tasmania
- $26.5 million for William Hovell Drive duplication in the ACT
House Building Boom — No Sign of Easing Yet
The remarkable house building boom of the past year continues unabated with another record month of activity and no sign of easing any time soon.
The ABS reports that the number of capital city house building approvals surged again over March to a new record monthly total of 10,075. 
The March result was 12.6% higher than the previous months total with house building approvals having increased by 46.2% over the first three months of this year compared to the same period in 2020.
All capital reported increases in house building approvals over March led once again by Perth up 15.4% followed closely by Melbourne up 14.8%, Adelaide up 12.8%, Brisbane up 8.7%, and Sydney higher by 6.1%.
Perth is now clearly the second most active capital for house building with 2326 approvals over March – lower than Melbourne at 3141 but higher than Brisbane 1572, Sydney 1515, and Adelaide 1074.
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
Now is the time to take advantage of the opportunities the current property markets are offering.
Sure the markets are moving forward, but not all properties are going to increase in value at the same rate. And some sectors of the market will continue to languish.
Now, more than ever, correct property selection will be critical.
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'How will the budget really affect our property markets? | Property Insiders [VIDEO]' have 18 comments
April 25, 2021 Mark
Its interesting to watch the FOMO effect on purchasing real estate at higher prices than they are worth as real estates are elevating prices during the demand. I also recently read an account of a person at auction in Sydney saying I felt like I had won lotto just because he secured the winning bid !
Now the prices are rising so quickly and people are borrowing way to much to purchase at historically low interest rates its not difficult to work out what happens next when interest rates rise again !
See household debt in Australia
https://www.finder.com.au/australias-personal-debt-reported-as-highest-in-the-world
Another concern is the misdemeanor of good debt and bad debt lets face it all debt is bad but it portrays a certain air of its ok because its good debt .. but good debt can turn bad too ie negative equity
We see the occurrence every decade or so the debt delinquency increases this last happened when interest rates were increased
I have been in a position where I have not only seen this occur but almost been burnt too .. not a good feeling but you learn by your mistakes very quickly
The oracle Buffet says be fearful when others are greedy and greedy when others are fearful
I am standing back and waiting for this supposed pandemic mayhem to cease ….
April 25, 2021 Michael Yardney
What you say is correct – some people are making poor decisions driven my FOMO – but that doesn’t mean it’s the wrong time to make a wise investment decision
April 2, 2021 Mary
@Joseph
Your comment about “Australia heading towards Japan” and being over 1T in debt
Have you seen this link lately?
https://www.usdebtclock.org/world-debt-clock.html
Australia is doing AMAZINGLY WELL compared to the rest of the world.
I suggest to try removing the lens of pessimism and looking at life in general with a more realistic and optimistic outlook
People are angry when prices go down
People are angry when prices go up
Can’t seem to win either way eh?
April 2, 2021 Michael Yardney
Well said
March 3, 2021 Jennifer
90% of jobs recovered? I I don t think so. The tourism and travel sectors have been decimated and the education sector is not far behind. It s a shame that 9-5ers forget that these sectors even exist. I personally have been getting by on menial casual jobs for over a year and it looks like that will continue for most of this year as borders remain closed. Some of us have had our lives turned upside down for the foreseeable future, so No, it is not back to normal. I m lucky as I had some money and a mortgage already but I can t even go to the bank to access a better rate through refinancing as I don t tick a single box right now. And I work for a very reputable company normally – stood down definitely through no fault of theirs or mine. Not all of us are back to normal!
March 3, 2021 Michael Yardney
We quoted the Australian Bureau of Statistics latest figures. Of course for the many people like you who are still without a permanent job and the situation is terrible and we are not wanting to belittle that.
February 4, 2021 Raj Thakrar
Hi Michael,
It is too early to be generalist and say property prices will hike. There are number of factors in play here.
1 Due to lock down some sales were on hold
2 Government Incentive in play
3 Relaxed lending rule
4 Government incentive
Cost of new build artificially inflated by builders and developers sending cost of new build to new level making house price higher. The buyers technically are not benefiting for these Government incentives they are going in to builder and developers pocket. Housing in Australia is still young growing market so bubble will burst scenario does to stack up. It is always demand and supply simple economics.
February 4, 2021 Michael Yardney
Raj
The facts show property values are already increasing and have for 4 months. Yes this is driven by pent up demand.
Can they keep increasing? you may benefit from reading this: Property prices cannot keep rising at the same rate
December 10, 2020 Philip Lee
The property market didn’t collapse because the government is throwing everything at it to keep it afloat. Our property market is not a free market driven by market fundamentals. It is manipulated by the government cutting interest rates to zeo, stamp duty concessions plus first home buyer grants, and government guarantees for deposits all sucking in the financially unsophisticated into putting themselves into a life of mortgage stress. It’s just kicking the can down the road.
December 10, 2020 Michael Yardney
Philip. You are correct, our property markets have never been a “free market”, they have been manipulated by the Reserve Bank and APRA. Remember a couple of years ago when investors were dominating the market pushing up prices, the RBA raised interest rates and APRA made it much harder for banks to lend to investors and this slowed down the markets.
Currently intervention has supported our markets and that’s good. It’s the government’s job to protect its constituents – you and me and one way of doing that is providing stability to our housing market. They are too big to fail and no one will let them fail.
October 16, 2020 Joseph Battaglia
Michael your optimistic views irrespective of the true underlying data is disconcerting.
The government is covering up the reality of the situation, throwing money against the wall at all costs (hoping some will stick) and falsely propping up the economy whilst kicking the can down the road. The rhetoric from parties with bias/interest in the real estate market are also contributing to the propaganda that “things are ok and sentiment is up” – whilst reality is different.
We are not leaders on the world stage, for our real property obsession, in fact we are almost ridiculed that we are a nation that increases their wealth through selling properties to each other increasing the price at each transaction.
Its fiscally clear, we should allow the reset button to deflate this overvalued bubble and get back to reality. I mean seriously, some of these prices are ridiculous!
Are we going the way of Japan?
This QE is just irresponsible on all counts.
Over $1T in debt for such a small economy… come on, who are we kidding.
October 16, 2020 Michael Yardney
You are right Joseph, many of our industries are on life support from the government at the moment. And while the property market was being supported by loan deferrals, they seem to be cleaning themselves up nicely. What is the alternative? Do you really want to see businesses go broke and people go hungry? Our government and those around the world have learned how to handle economic downturns. And spending our way out of a downturn is a valid economic argument
October 2, 2020 Dave
Dear Michael. Your articles are interesting
and usually very well written . However this one is full of a lot of spelling and sentence construction mistakes that in parts make it hard
to follow . Take a look at where it says sh-t (Let me know if you need a proof reader ) 😉
October 2, 2020 Michael Yardney
Thanks for the heads up Dave – you are right lots of errors in this one. As I can talk faster than I can type I usually use voice to text, and it is pretty accurate. But clearly I missed a couple of bad bloopers this time.
July 24, 2020 Martin
The RBA will print money. And has printed plenty of it already to fight covid-19. It just doesn’t give the money directly to the government. It prints new money and uses it to buy government bonds on the secondary market so that institutions can take a cut as they buy the newly issued bonds from the government So that the government can pay for jobkeeper and Then these institutions onsell them to the RBA for a markup.
July 25, 2020 Michael Yardney
There has been a lot of discussion recently about Modern Monetary Theory, which suggests central banks should print more money and then give (lend) it to the government, to help pay for it debts.
This week RBA governor Philip Lowe said that he won’t do that (print extra money) instead the banks should borrow on the open market at the prevailing low interest rates because they can afford it.
Rather than print more money he gave the Morrison government the green light to increase debt levels and lock in a larger budget deficit to support the economy during its recovery from the virus crisis
June 26, 2020 Alex P.
While Dr Wilson may say that more sellers entering the market is an expression of confidence, the flip side is that it may be the smart money taking the opportunity to exit while prices are still holding up. If you drill down in the data is there a way to differentiate whether these are investment properties or owner occupied properties being sold and how does that relate to historical data. Second point is that government intervention has done a good job of addressing short term liquidity over the crisis but there have been no measures on a similar scale to address solvency, and solvency is what really matters after the liquidity tap has been turned off.
June 26, 2020 Michael Yardney
Alex, you are right on both counts.
Our experience on the ground speaking to buyers, sellers and estate agents, is that there are very few distressed properties coming on the market at present.
Similarly we do not believe the government is going to pull the rug out from under us in September after he’s gone to such an effort to support the economy and our markets