Real Estate Institute applauds Budget 2024’s inflation forecasts, urges delivery on promises

The Real Estate Institute of Australia (REIA) has praised Treasurer Jim Chalmers for handing down Budget 2024, labelling it a strong budget if inflation forecasts hold true.

REIA President Leanne Pilkington highlighted the budget’s assumption that inflation will return to within the Reserve Bank’s target band of 2-3 per cent by the December quarter of 2024, well ahead of the RBA’s forecast of 3.5 per cent for the same period.

“This is good news for Australians struggling with housing affordability as it will mean less uncertainty around interest rates,” Ms Pilkington said.

However, she cautioned that the budget’s promises hinge on the delivery of these inflation targets, stating, “Budget 2024 promises a lot in this regard and Australia will be nervously hoping it delivers as getting inflation – and the cash rate reaching a neutral position – will be absolutely essential to the improvement of both housing supply and affordability.”

Ms Pilkington noted that the budget forecasts a slowdown in economic growth, with the Australian economy growth forecast reduced to 2 per cent for 2024-25 and a further 2.25 per cent for 2025-26, reflecting slowing consumer demand as Australians navigate the cost of living.

The REIA welcomed Budget 2024’s cost-of-living package and Homes for Australians incentives, but Ms Pilkington suggested that rental support and energy relief measures might be seen as insufficient by the electorate.

She also emphasised the need for a realistic assessment of the Homes for Australians package, stating, “Homes for Australians is just about allocating money to build homes for a sector already under strain and that already has a large funding pipeline. We need to use every tool in the toolbox to get more homes on the ground and Budget 2024 allocates more funding but does not deploy every single tool to resolve our chronic housing shortage.”

Ms Pilkington stressed the importance of cooperation between all three tiers of government, particularly the states, in implementing the budget’s housing measures, including the new Intergovernmental Agreement on housing.

She concluded by reiterating the significance of the budget’s inflation forecasts and their impact on housing supply and affordability, stating, “Again, this points towards the promise Budget 2024 makes around getting inflation under control and interest rates being the critical factor in unlocking supply – or at the very least – not further inhibiting it.”