AN INFLUX of cash is tipped for the property sector after last week's budget realigned the taxation of superannuation funds.
This is good news as it comes at time when property is back in favour with Australian investors, according to the latest Your Interest, Autumn 2006 national survey conducted by finance and investment company Elderslie Finance Corp.
Luis Garcia, a director of Elderslie Finance, said the survey results showed property outweighed the appeal of Australian shares and balanced funds with 29 per cent and 21 per cent of investors respectively naming shares and funds as their preferred investment options.
The Property Council's chief executive, Peter Verwer, said the budget was one that would promote growth and increase savings.
"Peter Costello's 11th budget will return money to taxpayers' pockets and give them a bigger slice of their own superannuation," Mr Verwer said. "The combination of personal and business tax cuts, along with superannuation reforms, will stimulate investment which is sure to have flow-on benefits for the property sector.
"A significant part of every extra dollar of personal savings will find its way to the property investment sector, given its strong track record in building stable retirement wealth for ordinary Australians."
Savills' national head of research Chris Freeman said the budget was good news for the retail sector, because of the tax cuts and their positive effect on the consumer wallet.
Mr Freeman said the budget would provide some relief in the retail market where development of centres was growing at about 8 per cent in a climate of slower retail sales growth.
"The expansionary fiscal budget will be a positive for retail and will help to alleviate the pressure on the household budget from the higher cost of petrol and interest rates," Mr Freeman said.
"Due to property institutions finding it difficult to acquire new centres, the trend has been towards development.
"Nationally, Savills has tracked 1.35 million square metres of retail under construction with 445,000sqm of this construction in NSW.
"Enclosed retail space in NSW equates to 5.18 millionsqm and space under construction represents about 8.5 per cent of the total enclosed market."
"With yearly real (CPI adjusted) retail trade growth not expected to exceed 3 per cent until 2008, retailers could well feel the impact of this new supply, although the tax cuts are very positive news."
David Woolford, the chief executive of Knight Frank, said the 2006 budget contained a number of positive initiatives that would support business and, in turn, support the commercial and residential property sectors.
"The most direct impact on the property sector will come from the new tax savings in superannuation," Mr Woolford said.
"The revised tax arrangements for superannuation savings, coupled with tax cuts, will most certainly encourage Australians to invest in their superannuation funds.
"This budget will further add to the pressure for Australian institutions to find high-grade, income-yielding investments."
