If you are trying to get into the housing market as a first home buyer you may be aware that the government is trying to “level the playing field” with a range of housing measures that are designed to address inequity – but what does that actually mean if you are trying to buy your first home?
According to the government, the reforms introduced as part of the Federal Budget may support an additional 75,000 Australians into home ownership over the next decade.
This does not mean buying property will suddenly become easy, but the changes will have broad-reaching impact. As it stands, both property listings and clearance rates are down, suggesting buyers and sellers are stepping back from the market until the full ramifications of the budget become clearer (and are legislated).
Even though it’s early days, it’s worth being across what the changes may mean to you.
Opportunities for new investors
Proposed changes to investor tax concessions, including negative gearing and capital gains tax, aim to reduce some of the advantages investors currently have over owner occupiers and encourage more investment into newly built housing instead of existing homes.
The government has also announced a temporary ban on foreign investors purchasing established homes, which is designed to reduce competition in the established housing market and prioritise local owner occupiers.
For first home buyers, these changes could potentially mean less competition at auctions and inspections, particularly for older established homes.
While it’s still not clear exactly what this will mean for property prices, even slightly less competition could help buyers who are already stretching their borrowing limits.
Boosts to housing supply
Another major focus of the government is housing supply.
The problem is that Australia simply does not have enough housing supply to meet demand, which is one of the biggest reasons prices have remained so high.
More housing construction and retaining negative gearing on new builds is intended to help over time. The government has committed billions toward infrastructure and housing development projects, particularly in growth areas and outer suburbs, although these projects will take years to fully flow through to the market.
A lot of the incentives either directly or indirectly favour new housing, which means developers are likely to market heavily toward first home buyers as new builds become available to purchase.
New or expanded support programs
Government schemes to help first home buyers have been in place for some time, and now that we are in a new financial year, several new or expanded support measures are officially available.
A big focus has been on helping younger buyers who are struggling to save a full 20 per cent deposit while also dealing with high rent and rising living costs.
Fresh places in the Home Guarantee Scheme opened from 1 July, which is important because these spots are limited. Eligible buyers who previously missed out may now have another opportunity to apply for a low deposit home loan without paying Lenders Mortgage Insurance (LMI).
The government is also expanding its “Help to Buy” shared equity scheme, which allows eligible buyers to purchase with just a 2 per cent deposit while the government contributes part of the purchase price. In return, the government keeps a share in the property.
For a lot of people, especially single buyers and younger Australians trying to buy without family support, these schemes could make home ownership feel a little more achievable.
The First Home Super Saver Scheme is continuing as well, allowing eligible buyers to use voluntary super contributions to help save for a deposit faster, often with tax advantages compared to saving in a regular bank account.
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Nicholas Berry Credit Representative Number 472439 is a Credit Representative of Integrity Finance (Aust) Pty Ltd – Australian Credit Licence 392184.
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