But NAB economics guru gives optimistic post-Budget rate forecast
The property market took a backburner in Treasurer Jim Chalmers’ pre-election Budget on Tuesday night.
Chalmers (pictured)’ headline policy was a surprise kicker in the form of moderate tax cuts that should save the average consumer a few hundred dollars a year (once and if they kick in following the election).
These tax cuts were framed as an election bribe by Shadow Treasurer Angus Taylor, who called the policy a “cruel hoax”. The Coalition said it will refuse to back them.
The Medicare levy reduction for low-income earners was also increased, while Chalmers announced an extension of the quarterly energy rebate.
Over to housing, Chalmers announced that the Help to Buy scheme for first-home buyers will be expanded, with $800m allocated to increase price and income caps.
Additionally, $54 million will be provided to states to promote the use of modular and prefabricated homes, aiming to accelerate construction times.
Chalmers also announced a temporary ban on foreign property purchases in a bid to shore up domestic supply. This will take effect for two years from this April.
NAB executive Julie Rynski was lukewarm on the announced measures in a post-Budget webinar this morning.
Asked by Nine’s Deb Knight if the Budget addressed the key issues of labour shortages, costs and housing supply, Rynski said: “I don’t think they did (and) that is my concern, not only as someone who works with businesses every day, but for our country, I don't think it is dealing with the issues.”
While Rynski applauded Chalmers for setting aside funds to support first-home buyers, she criticised the slow process of rolling out these measures.
On the skills front, Rynski said: “We keep calling out the fact that we have a lack of skilled labour, but we're not addressing that by doing some fundamentals. I don't think there's anything in (the Budget) that's necessarily going to stimulate business and help confidence.”
Labor maintained a national target of 1.2 million new homes over five years, although this target is currently falling short of the requisite quarterly build rate.
Interest rate optimism
NAB’s soon-to-retire economics guru Alan Oster gave an optimistic end-of-year interest rate forecast following Chalmers’ Budget.
Speaking to Knight, Oster predicted that trimmed mean inflation will drop to 2.5% before 2025 comes to a close.
Trimmed mean inflation strips away the upper 15% and lower 15% of price movements, therefore giving a clearer picture of where core prices are trending.
Oster’s prediction is a more optimistic one than the Reserve Bank of Australia’s conservative guidance.
Oster is due to retire at the end of this week after 32 years as NAB’s chief economist.
