houses-bird-eye-view
Image – Canva
  • Treasurer Josh Frydenberg will deliver the Budget tomorrow night
  • The Family Home Guarantee has expanded significantly, including initiatives for regional areas
  • Announcement has been welcomed by the industry, although concerns have been raised regarding supply

Tomorrow evening, Treasurer Josh Frydenberg will be delivering the last budget of the Morrison Government before the federal election in May.

From delivering a budget surplus – the first since the Howard-Costello era – to delivering the greatest peacetime deficit amid the first recession in a generation, Mr Frydenberg has seen it all.

With polls looking grim for the Coalition, pre-election sweeteners are expected in what is seems a de-facto election campaign.

So, what’s in store for property?

Already, the government has made key announcements affecting the property and real estate sectors.

These sectors can be a grey area for the federal government as typically many supply decisions, and stamp duty, are directly controlled by the state and territory governments.

However, as seen during the pandemic, the federal government can significantly influence housing policy.

The most notable of these is the extension of the Home Guarantee Scheme – which allows certain buyers to purchase a property for as little as a 5% deposit. The government then guarantees lenders the difference between the deposit and 20%, which is typically required to avoid lenders’ mortgage insurance.

Under the extension plans, the number of places will double to 50,000 per year. 10,000 of these will be reserved for first home buyers or those who haven’t owned a home in the last five years to purchase a property in a regional area, under the new Regional Home Guarantee.

For those wishing to participate in the scheme, income limits apply – currently $125,00 for singles and $200,000 for couples, with price caps depending on the region you wish to buy. These range from $800,000 in Sydney to $350,000 in regional South Australia.

The expansion will also include 5,000 guarantees per year under the Family Home Guarantee which will allow single-parent homes to purchase a property with just a 2% deposit.

Broad support – but supply needs to keep up

The expansion of the scheme has been virtually universally welcomed – even by the Labor party, with Shadow Treasurer Jim Chalmers noting the regional scheme is similar to one they announced this month.

The Property Council of Australia is among the major property players who have welcomed the announcement, with Chief Executive Ken Morrison applauding the program that he has deemed as being successful in helping eligible first home buyers.

“It is welcome news to see its scope expanded so significantly,” Mr Morrison said.

“Bridging the deposit gap is a huge hurdle for many aspiring homeowners and this scheme helps people address this while being appropriately targeted.”

Mr Morrison, however, noted that the scheme’s expansion is a demand-side measure and it “won’t in itself do anything to ease supply-side pressures which are a main driver of affordability issues.”

Ken Morrison PCA
Ken Morrison, CEO of the Property Council of Australia. Photo – LinkedIn.

“The Government’s own forecasts from the National Housing Finance and Investment Corporation predict that housing supply was set to drop by 35 per cent right at the time population growth would resume, leading to a deficit of 163,400 homes by 2032,” he said.

“New Property Council research released last week also showed that the public’s concern over housing affordability had leapt and voters expected national action.”

Ken Morrison, Property Council CEO

The Urban Development Institute of Australia (UDIA) also welcomed the news, noting bipartisan support for the scheme in regional areas.

“The Home Guarantee Scheme is a critical initiative that provides genuine support for Australians across cities, towns and regions, that are struggling under the weight of increased demand,” said Max Shifman, UDIA National President.

Like Mr Morrison, Mr Shifman has called for measures to bolster the housing supply.

“The full success of the scheme will rely on streamlining planning approvals and delivering enabling infrastructure – water, sewer, power and roads – to ensure new housing can be constructed,” he said.

“Without sufficient development ready land, this fantastic initiative will fall short without enough new housing to buy or build. In regional areas the root cause is the lack of zoned and developable land, not a lack of vacant space.”

Max Shifman, UDIA

Max Shifman UDIA
Max Shifman, UDIA National president. Image supplied.

“Unless we boost supply immediately, the looming affordability crisis will be overwhelming – particularly for first homeowners, but also affordable rentals and vulnerable Australians relying on subsidised housing.”

National Australia Bank (NAB) also applauded the announcement, with NAB Group Executive Personal Banking, Rachel Slade, noting customer interest in the program has been beyond their expectations since the original scheme was announced.

“At NAB, we have been able to support over 12,000 Australians buy their first home via the Schemes over the past two years,” said Ms Slade.

“We look forward to supporting thousands more in partnership with the Federal Government and NHFIC.”

“Through this competitive housing market, we’ve seen the confidence provided by fast decisions is critical in reducing stress and supporting customers into their dream home.

“Around 50 per cent of eligible customers are now provided a decision within a day and 30 per cent of those are getting unconditional approval within an hour.”

Rachel Slade, NAB

The Property Tribune will keep you up to date with more Budget announcements as they become public knowledge.

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