Last Tuesday Federal Treasurer Josh Frydenberg delivered the annual budget; a big-spending, jobs-focused budget which contained help for single parents and first home buyers to enter the property market, partially by encouragement incentives for Australians nearing retirement to downsize their homes, in order to free up more housing for younger families and help more people into home ownership.
Those aged over 60 will be allowed to contribute up to $300,000 into their superannuation if they downsize from their family home; this will be a one-off contribution per person, or $600,000 per couple. As part of superannuation changes, the government is extending access to its downsizer contributions scheme by lowering the minimum age from 65 to 60, from 1 July 2022. Changes for downsizers is also expected to help women and others with moderate superannuation balances.
“This improves the flexibility for Australians to contribute to their superannuation savings and may encourage people to downsize sooner and increase the supply of family homes,” the budget papers stated.
Real Estate Institute of Australia president Adrian Kelly said the incentive for Australians aged 60 and over to sell the family home and move to housing that better suits their lifestyle should encourage turnover in a tightly held market.
The budget includes a new Family Home Guarantee scheme to help 10,000 single parents over the next four years buy a home with a low deposit.
The Family Home Guarantee is modelled on the FHLDS, with the same property price caps and being targeted at low and middle income earners with an income up to $125,000. Child support payments are excluded from the calculation.
Single parents with dependent children will be able to buy a home with a deposit as low as 2%, with the government effectively covering the cost of lenders mortgage insurance that is normally required by buyers who do not have a 20% deposit. They do not have to be first-time buyers but must not currently own property. The government estimates 125,000 single parents with dependants may be eligible for the guarantee in 2021/22, most of them headed up by women.
The government will also provide another 10,000 places under its popular First Home Loan Deposit Scheme plus an additional 10,000 guarantees specifically for first-home buyers purchasing newly built homes, resisting calls to remove the caps. From 1 July, 10,000 guarantees will be made available over four financial years.
The FHLDS new homes program, introduced in the October 2020 budget to stimulate construction activity, has been extended into a second year. The government will provide another 10,000 places in 2021/22 for first-home buyers building a new home or purchasing a newly built home. That is in addition to the 10,000 annual guarantees provided under the main FHLDS that will become available on 1 July.
Both the FHLDS and the New Home Guarantee allow first-time buyers to purchase a home with a deposit as low as 5%, with the government providing a guarantee of up to 15% of a loan.
Housing Industry Association managing director Graham Wolfe said the budget measures will provide ongoing support for households looking to achieve the goal of home ownership.
“The measures introduced over the last three years to assist first-home buyers, combined with low interest rates, have been incredibly effective in growing the share of first home ownership in Australia to record heights,” Mr Wolfe said.
The government is also increasing the maximum number of voluntary contributions that can be released under the First Home Super Saver Scheme from $30,000 to $50,000, to help support first-home buyers to raise a deposit more quickly.
About 18,500 new home buyers have released savings under the FHSSS since it began in July 2018.
Time will tell how effective all the above measures will be in addressing the housing affordability issue; but at least it is on the Federal Government’s radar, and they are taking steps to address it.