The nation's news sites are buzzing after Treasurer Jim Chalmers handed down the Federal Budget for 2024-25 on Tuesday, May 14.

But what did this crucial report give to the real estate industry, including everyday households?

Federal Budget 2024–25: "Economic outlook fraught and fragile"

In his Budget speech to Parliament last night, Treasurer Dr Jim Chalmers noted that Australia's economic outlook was "framed in fraught and fragile global conditions" and backed by a global economy that while "resilient in parts ... was (subdued overall)".

"Inflation is lingering in North America, growth is slowing in China and tepid in Europe, tensions have escalated in the Middle East and persist in Ukraine, and global supply chains are fragmenting," Dr Chalmers said.

"This uncertainty combines with cost of living pressures and higher interest rates to slow our economy, with growth forecast to be just 1.75% this financial year and 2% next year.

"Slower growth means a softer labour market, with unemployment expected to rise slightly to 4.5% cent next year, even as we create tens of thousands of new jobs."

Dr Chalmers then noted Australia's good news which includes:

• annual inflation more than half that of its 2022 peak with Treasury forecasting inflation could return to target earlier than expected
• 780,000 jobs created since Federal Government was elected in 2022
• Real wages growing again for first time in almost three years
• Net overseas migration next year expected to be half that of last year

Federal Budget 2024–25: real estate offerings

The Federal Budget's key deliveries to the real estate and housing industry include:

More help for renters

• $1.9 billion will increase the maximum rates of Commonwealth Rent Assistance (CRA) by 10%, in first back‑to‑back CRA increase in more than 30 years

Building more homes

• $423.1 million in new funding (subject to states and territory signing) for new five-year National Agreement on Social Housing and Homelessness 

Plus, the $32 billion Homes for Australia plan, initially unveiled on Saturday, May 11, will in part comprise:

• 1.2 million homes to be built in next five years, starting in July
• $6.2 billion in new investments which will provide more housing for students * and fund 40,000 social and affordable homes **
• $120 million over three years to support additional remote housing in, and repairs to, Northern Territory social housing 
• Funding doubled to address homelessness
• $1 billion towards accommodation for women and children fleeing domestic violence, and youth
• $88.8 million over three years to train 20,000 tradies to build homes through fee-free TAFE, and pre‑apprenticeship places 

* International student enrolment numbers will be limited, with universities needing to build more accommodation

** Additional $1.9 billion in loans to help build social and affordable homes

Federal Budget 2024–25: Real Estate Institute of Australia

REIA president Leanne Pilkington was cautiously optimistic about the Budget's real estate and housing offerings, noting its potential strength - if inflation forecasts hold.

Ms Pilkington said the Budget's centerpiece cost-of-living package and Homes for Australians incentives would be "welcome measures" for Australians.

However, the increased CRA assistance would probably be regarded as insufficient by the electorate while it was important to be realistic about the Homes for Australians package.

“(This package) is just about allocating money to build homes for a sector already under strain and that already has a large funding pipeline," Ms Pilkington said.

“We need to use every tool in the toolbox to get more homes on the ground and (while) the Budget allocates more funding, it does not deploy every single tool to resolve our chronic housing shortage."

Ms Pilkington was particularly concerned that the multi-billion government package required all three government tiers, especially states, to get on board - which has not happened before.

The same was true for the "much-touted" new intergovernmental agreement
on housing (National Agreement on Housing and Homelessness), the president said.

Federal Budget 2024–25: CoreLogic

CoreLogic's head of Australian research, Eliza Owen, was similarly cautious about the Budget's delivery.

Ms Owen approved the allocated funding in "urgently needed" sectors including crisis accommodation, social and affordable housing, and rental assistance, noting this aid would help low-income households struggling with housing and rental increases.

"The decline of social housing over time has worn down the buffer between the private rental market and insecure housing, so when rents are rising as strongly as they are now, vacancies are low and demand is high, it’s low-income renters who are increasingly vulnerable," she said.

However, Ms Owen was unimpressed by the Budget's "three big misses" in real estate and housing: CRA, construction capacity and housing demand.

Regarding CRA increases, Ms Owen said the government missed an opportunity to optimise payments by ensuring they were well targeted. 

"The CRA increases ... are very modest in dollar terms compared to actual rent increases in the private rental market," she said.

"The maximum CRA rate of around $125 per week means the biggest increase under the budget would be $12.50 per week."

Regarding construction capacity, Ms Owen describes the industry as "woefully stretched (and) overheated".

"There are too many projects stuck in the pipeline and not enough feasibly-priced labour and materials to deliver them," she said.

"We are unable to deliver homes at historic average volumes, let alone a stretch target of 1.2 million homes in a five-year period."

"Federal and state governments might be better off letting approvals continue to unwind in the short term amid high interest rates, so that cost pressures start to ease and the construction industry can focus on delivering the pipeline."

Ms Owen approved the Budget's plan of "beefing up" the sector's workforce but said it wasn't clear when these additional workers would be added to the industry.

"A quicker way to boost productive capacity could be to focus more on already
qualified migrant labour," she said.

"Aside from labour, investing in research and innovation in construction processes
would also help to boost productivity."

As for housing supply and demand, Ms Owen said the Budget should have delivered bold tax reform on housing, which could potentially increase government revenue.

"Our existing housing stock (would be) used more fairly and efficiently, at a time when new supply is challenging to deliver," she noted.

As well, demand for existing housing stock is increasingly inefficient in some areas - but there is room to modify the ways that tax assets such as housing are utilised, including possible revamps of stamp duty, capital gains tax and negative gearing, said Ms Owen.