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The Mid Year Economic Forecast Outlook (MYEFO), released Thursday, is good news for both the property sector and the broader economy, according to the Real Estate Institute of Australia.
The $16 billion improvement in the forecast deficit is largely driven by fewer people needing the JobKeeper wage subsidy, and points to a better-than-expected economic recovery, said REIA President Adrian Kelly.
“GDP growth is now forecast to grow at 0.75%, up from the earlier forecasted decline of 1.5%,” Kelly said. He said the property sector has played a vital role in the recovery.
The MYEFO noted that “a persistent recovery in the established housing market should support activity in the economy in coming years.”
Read more: Australia’s housing market proves resilient in 2020
“Government stimulus measures have been, in part, responsible for the resilient demand in residential property,” Kelly said. “Even though growth in new dwelling investment is unlikely in the 2020/21 fiscal year, given the lags between building approvals and construction activity the forecase for dwelling investment has been revised from -4% in the Pre-election Economic and Fiscal Outlook to -3.5% in MYEFO.”
Kelly said that the MYEFO built on the fiscal package of the October Budget 2020, which was brought forward and backdated to the Stage 2 tax cuts. Kelly said that “it will provide support for businesses through the reintroduction of the loss carry-back tax provisions, which is an expansion of the instant asset write-off program and exemptions for Fringe Benefits Tax.”
MYEFO, along with the National Housing Finance and Investment Corporation’s State of the Nation’s Housing Report, released earlier this week, “forecasts improved housing affordability over the next two years and point to a bright outlook for all home buyers in general and first-home buyers in particular,” Kelly said.