- The federal government released their budget last night, likely the last before an election
- Not many new surprises due to many policies being released prior to the budget
- Family Home Guarantee arguably the most reported initiative announced
Last night was, of course, budget night.
While the budget is usually handed down on the second Tuesday of May, this tradition was postponed October last year due to Covid-19.
Two budgets ago, Treasurer Josh Frydenberg projected the first surplus – of $6 billion – since the end of the Howard-Costello rein of the federal purse. Last year, amid the global pandemic, he presented the largest deficit in the nation’s post-war history, an eye-popping $214 billion.
Forecasts were initially dire at the time. However, thanks to an array of factors such as Australia’s relative success in handling the pandemic and a surge in demand for iron ore, the Lucky Country bounced back well beyond even the most optimistic forecasts.
This enviable position, in conjunction with the high chance of a looming election in the next year, has meant that many ‘sweeteners’ materialised.
In terms of the property market, there weren’t too many surprises last night as many announcements had been released, but here is a wrap of the housing-related policies:
Family Home Guarantee
Arguably one of the most reported initiatives is the Family Home Guarantee whereby the government will guarantee 18% of a home loan for 10,000 single parents – meaning the buyer can purchase a property with just a 2% deposit.
Full details are expected to be released in due course, but the policy has garnered a positive reception. Single parents typically have lower rates of homeownership compared to the rest of the population and women represent about 64% of lone parent and adult households, according to the Australian Institute of Health and Welfare.
Increased cap for the First Home Super Saver Scheme
Introduced by former Treasurer Joe Hockey during the Abbot era, the scheme allows potential first home buyers to make voluntary contributions towards their super that can then be withdrawn for a deposit. This allows individuals to take advantage of super-related tax incentives in order to accelerate savings. As part of the budget, the cap has been increased from $30,000 to $50,000.
Eligibility age decreases for downsizer super contribution
Australians 60 and older can now make a tax-free contribution to their super of up to $300,000 from their selling their home. Previously, the minimum age was 65.
This allows downsizers to take advantage of super-related tax benefits and the $300,000 cap applies to an individual – so couples between them can put $600,000 into their super.
It is hoped this will encourage more older Australians to downsize and increase housing stock, especially for larger family homes. Undersupply is an issue in the market.
Other announcements included an additional 10,000 places for the first home loan deposit scheme and an additional $15.2 billion in infrastructure investment, which brings the total investment in such projects to $110 billion over the next decade.
All of these suggest the housing and construction industries will not be slowing down anytime soon.
Some of the announcements will help kick along demand (single parents, first homeowners) whereas others (older Australians downsizing) should assist supply.
