It’s no secret that the last couple of years have been turbulent in the property market. From a boom to stagnation and even a slight dip in prices in some areas, and record-low interest rates to six jumps in the cash rate in a row. Housing supply issues were a key consideration in the Labor Government’s Federal Budget released last night.
What was included in the budget to help?
Equity contribution to get feet in the door
Up to 40,000 eligible Australians earning under $90,000 per annum (or $120,000 for couples) could make use of the government’s Help to Buy scheme. Eligible buyers will need a minimum two percent deposit with the federal government contributing up to 40% equity for a new home and 30% for an existing home. The buyer will not be required to pay rent on the stake of the home held by the government. The Labor Government estimates this could cut the cost of buying a home by up to $380,000 for a new build or $285,000 on an existing home. Price caps apply per region.
With support from states and territories, investors and the construction sector, the government set an “aspirational target” of one million new, well-located homes to be built from mid 2024-2029.
This number includes 10,000 affordable dwellings funded by the federal government and an additional 10,000 affordable homes funded by state and territory governments.
“One of the big challenges that we have in our economy is we’ve got these jobs and opportunities being created, but it’s becoming harder and harder to live near where those job opportunities are,” Treasurer Jim Chalmers said.
“I have been working really closely and really hard with superannuation and other institutional investors, with the states and territories, with the building and construction industry as well and with the union movement to see what we can do to shift the needle on affordable housing,” he said.
Additional money will also be unlocked to entice super funds to invest in social and affordable housing.
With recent severe weather events once again bringing disaster prevention and resilience front of mind, the federal government has committed $3 billion to spending toward disaster response. This includes an additional 5,000 volunteers to be deployed when future disasters occur and $200 million a year in prevention and resilience through the Disaster Ready Fund. Additional money from this pot will go toward payments and support for people who are impacted by disasters, such as floods.
The budget included some measures to encourage baby boomers to downsize their homes, intended to boost housing availability for younger families.
Savvy downsizers wanting to put earnings from the sale of property into their super can now do so from age 55, where it was previously only for over 60s. This enables a one-time post-tax payment of up to $300,000 per person into a super fund. The assets test exemption for the earnings from the sale of the principal home will also be extended to 24 months (where it was previously 12).
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