The Federal Budget 2013/14 Beyond The Headlines
With The Federal Budget now almost one week old and with the flood of commentary starting to slow, I wanted take a look at how this budget impacts the housing market. With my usual emphasis being new apartments, land estates and packaged estates.
At first glance this budget was, with only a few exceptions, a fairly neutral budget for our sector. Or was it?
Apart from the headline points, that I will expand upon, I personally think there are some seeds of a much wider discussion coming out of the budget that will affect our marketing priorities over the next few years and perhaps beyond to the end of the decade.
The reason why I have this view will be outlined in my next two posts.
Let’s Tick off the Key Items
If we’re looking for the matters of substance that will impact the property market and in particular new developments then we need to consider a handful of items. To my reading these include, infrastructure, downsize assistance to seniors, changes to the baby bonus and a generally feeling of restraint in the budget.
But these comments also need to be read not only in light of the Government’s budget itself but also the Oppositions budget reply. In the budget reply we also see a policy of restraint, which I will return to, but also some overlap via paid maternity leave and the announcement of a review to the tax system and this appears to now include the GST.
From the point of view of many people in the housing market or looking for a new home, I suggest that this short list of policies has the potential to impact the market long after the memory of last week’s speeches fade.
Some Key Demographic Changes
If we take the wider view of the combination of policies touched upon in the budget I can see areas where the key demographics we deal with everyday may shift. So let’s take a brief look at why.
While I agree with the already expressed point of view that the downsize assistance being offered in the budget is very specific and highly targeted, the measure is important.
It signals the awakening in policy settings of how important this generational change in the housing market is going to become. Baby boomers hold much of the housing stock and if they remain reluctant to move the ramifications need to be more fully debated. Also from a marketing perspective, we need to ask if we are addressing this market with enough energy and on-target messaging.
Or is this a sector that is being neglected or at the very least taken for granted? Some evidence suggests so.
It has been estimated that less than 10% of Australian advertising expenditure targets Baby Boomers, despite the fact that the boomers are now entering the ‘Lifestyle’ stage of their lives and have more disposable income than any other group.
I think that property marketing would fall into this group and needs a re-think well beyond the conformist idea of a sea or tree change. Even more so if more of the baby boomers are to encouraged to move over the next decade.
Infrastructure Front and Centre
The national figures for the amount of new infrastructure are as we all know colossal. Last week’s budget listed some big figures and big ambitions. But I think the key message is that development will be stifled if words do not lead to action. When we market almost any project the role of infrastructure is key.
I was reminded of this recently (not that I needed reminding) when I was in the North West of Sydney. In the late afternoon I drove towards a newly up-graded CityRail station that also adjoins one of Sydney’s major growth areas.
What I saw all around the station was an endless sea of parked cars, not only in the car-park but also for as far as I could see in every direction, cars lining local streets. It reinforced to me how starved some areas are of decent public transport.
As an industry we need to help ensure that infrastructure remains a key issue in Federal and State budgets so that promises become reality.
The Baby Bonus – Paid Maternity Leave
Outside of the National Disability Insurance Scheme, policies surrounding the baby bonus and maternity leave are key budget points that can influence social policy and market demographics. While changes may not result overnight, both are policy areas that may well impact the shape of demand in the housing market.
For several years Australia has seen the biggest baby boom in our history with births eclipsing the peak of the original baby boom that ended in 1961.
Recent Australian Bureau of Statistics figures show that our population growth is one and a half times the global average. Women are waiting longer to have children, with the average age rising steadily since 2000. We have also seen that the proportion of mothers aged 35 and over also continues to rise.
The current debates around paid maternity leave and the shape of any ‘baby bonus’ are key in helping to shape housing demand, and so last weeks’ budget should remind us of this fact.
Back in 2002 The Howard government introduced the baby bonus payment as the fertility rate hit an all-time low of 1.7 children per family in 2001. Now it can, I think, be reasonably assumed that as a result of that policy the fertility rate is now more than two. Such policies do directly bring about demographic change and this influences the shape of the housing market.
Fiscal Restraint, Budget Cuts and the GST.
Last week I looked at some of the challenges of marketing projects in a low interest rate environment.
Now that we have the budget clearly setting a policy of fiscal restraint, expenditure cuts and a possible future change to the GST albeit after the next Federal Election in 2016, how might this influence consumers?
The content of the budget we need to look at are the possible consequences for employment, economic growth and the flow to consumer confidence in the housing market. In my next post let’s consider how these big-picture points plus the matters already highlighted all combine and consider how we may have to adopt our marketing and product mix.
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