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Budget offers excellent news for first time buyers

March 30, 2022

The 2022 Federal Budget delivered a bagful of goodies for the Australian residential real estate market, with the continuation of the Home Guarantee Scheme and the doubling of the places offered by the scheme aimed at tackling housing affordability. 

 Angus Raine, Executive Chairman, Raine & Horne, said, “I feel like it’s the 24th of December, and we’ve already opened our presents.

 “The expansion of the Home Guarantee Scheme from 20,000 to 50,000 places a year is a good step for first home buyers trying to jump off the rental treadmill.

 The extended First Home Guarantee will allow first home buyers to purchase a home with a 5% deposit without paying mortgage insurance because the Government guarantees the loan.

 “Any budgetary measures that support first home buyers to manage the challenge of saving a significant deposit and realising their dream of homeownership sooner is welcome news,” Angus said. 

 “There have been some critics saying that 50,000 still isn’t enough. However, we are often too quick to judge, and we should give this extension some time to filter through to the real estate market.”

 Family Home Guarantee

 The Government has also expanded the Family Home Guarantee with another 5,000 places for single parents who earn up to $125,000 a year to have assisted access to established housing. Under the Family Home Guarantee, single parents can purchase their first properties or re-enter the housing market with just a 2% deposit.

 According to Angus, extending the support to assist single-parent families is commendable, especially as it is increasingly challenging to save the 10% deposit needed to achieve the dream of homeownership. 

 Regional Home Guarantee

 Angus also welcomes the new Regional Home Guarantee, with 10,000 places annually for migrants and anyone who has not owned property for five years – this initiative is restricted to either building or buying a newly built home.

 “Most first home buyers usually go for established homes, so both parties could consider tweaking this initiative in the run-up to the upcoming Federal Election. 

 At the same time, Angus applauded the Government’s record infrastructure investment pledge, with $17.9 billion committed towards new and existing infrastructure projects. This investment includes plenty of support that will flow through to regional centres including $1.6 billion for the Brisbane to the Sunshine Coast (Beerwah-Maroochydore) rail extension, $1.121 billion for the Brisbane to the Gold Coast faster rail upgrade and $1 billion for the Sydney to Newcastle – faster rail upgrade.

 Angus said, “It’s pleasing that the government has invested heavily in infrastructure as it makes new regional markets more accessible.”

Housing affordability 

 It’s clear that the extended First Home Guarantee (previously called the First Home Loan Deposit Scheme), the extended Family Home Guarantee, and the new Regional Home Guarantee aim to address housing affordability nationally, Angus said. 

 He added, “While we support the new and extended initiatives to get more Australians into their own homes, there are still measures the next government can consider that will address affordability, including more support for older investors.”

 A tax break for older investors 

 In 2021, in a submission to the House of Representatives Standing Committee on Tax and Revenue[i], Mr Raine called on the Federal Government to consider capital gains tax breaks for older investors. 

 Angus noted increased real estate values during the pandemic has made it more challenging for older property investors – defined as baby boomers and the silent generation – to sell long-term assets.

“Property held by older investors contributes to supply challenges in capital cities. One option to breaking the supply impasse is to provide older investors with an exemption for, say, 24 months on the payment of the CGT liability.

“There are also other measures that could get empty nesters moving, such as stamp duty breaks when they downsize, which are the domain of the state and territory governments. 

“If we can provide encourage for older property owners to sell their property assets, this will unlock a huge amount of stock and go someway towards addressing affordability now rather than waiting for builders and developers to fill the void.”

The Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella agrees, “We acknowledge that we can’t just rely on the Federal Government to tackle housing affordability, and that’s why the REIQ would support all levels of Government working together to develop a bipartisan plan to address housing affordability and better planning for our future housing needs.”

[i] https://www.aph.gov.au/Parliamentary_Business/Committees/House/Tax_and_Revenue/Housingaffordability/Submissions