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Australian Budget reaction by Colliers

Rory McLeod, Colliers International National Director of Research, said the budget was appropriate under the circumstances.

"We are in tough times and tough measures need to be taken," said Mr McLeod.

"I am concerned in the increase in debt level and the inflationary long term effect," he said.

"The spending on infrastructure will mean that costs of materials and trades will be underpinned rather than fall because of the increased demand," he said.

"If you’re a developer your costs are going to come down."

"I think the boost to the First Home Buyers Grant is a good thing for brand-new homes because it stimulates construction and therefore jobs, but I don’t think the grant boost for purchasing existing houses is a good thing because all it does is artificially inflate prices and creates an artificial bubble in the lower segment of the market."

Grant Dearlove, Colliers International Managing Director Residential, said the three-month extension of the FHOG Boost would continue the momentum in the sub $450,000 bracket.

"In the middle of last year before the First Home Owner Grant boost was introduced, we saw some of the most significant drops in turnover in first home buyer property for the last decade, and now we’ve seen a massive resurgence because of it."

"Since the boost was introduced its increased sales by over 50% in this first home buyers bracket – and extending it was a wise move," he said.

"The boost has seen a lot of stimulus, and the ten million dollar question is whether the phase out will stop that momentum," he asked.

"You have to be practical and realise the Government can’t fund it forever," he said.

"Despite the scale back of the FHOG we should see the momentum continue as interest rates drop further – which is good for home buyers and everyone in the market.

"Pessimists’ say it’s still not enough, but the investment and the stimulus created has certainly brought life back into the market," said Mr Dearlove.

"We are more optimistic that we will see some bracket creep and higher priced residential properties will see some renewed interest in the next 6 to 12 months in what has been a very flat market."

Mr Dearlove also welcomes the focus on Infrastructure.

"Infrastructure is a major ingredient in the growth of property prices, so we are headed in the right direction.

Jonathan Rivera, Colliers International Residential Research Director, said he didn’t think the budget was tough enough given the current circumstances.

"I was expecting one of the toughest budgets the country had seen, however, it is sound in my opinion."

"Any incentive is a good incentive, and hopefully that will filtrate through to the property market.

"Developers are having difficulties producing developments which are affordable for buyers and the resulting lack of supply could limit future opportunities.

"We need to be wary that we aren’t creating a generation of home owners under mortgage stress.

"To see if the infrastructure expenditure will be enough is yet to be seen, but it is a step forward in developing areas which are lacking infrastructure.

"Hopefully that will filtrate through to the property market because infrastructure is a driver of people moving into an area."

Helen Swanson, Colliers International Queensland  commercial research manager said the Queensland commercial property sector should benefit from the $1.4 billion for major roads in Queensland and the Gold Coast light rail project.

"These projects will improve efficiency which means it’s quicker to transport goods from A to B, which is appealing to commercial and industrial sectors," she said.

"We are still waiting upon the Infrastructure Australia final project list – where a number of major infrastructure projects for QLD would help stimulate economic activity and consequently commercial demand in Queensland. 

"More importantly the Melbourne-Brisbane inland rail will be an important infrastructure project which would stimulate commercial and industrial property growth in Queensland," she said.