Treasurer Jim Chalmers has handed down Labor’s first federal budget since forming government. And with Australia’s median property price still well above $700,000, despite the downturn, housing affordability was unsurprisingly high on the agenda.
“For too many, the great Australian dream of home ownership seems completely out of reach,” he said.
“Rents are through the roof and many families are struggling to keep up. Supply hasn’t kept up with demand, which means too many people struggle to live close to where they work.”
As such, the centrepiece of the budget’s real estate initiatives was the federal government’s new National Housing Accord, a landmark agreement struck between all levels of government and the private sector, including superannuation funds and the construction industry.
The National Housing Accord
The agreement sets an ‘aspirational’ target to build one million new, “well-located” homes over five years starting from mid-2024.
However, most of the supply needs to come from the market – as the budget commits an initial $350 million in additional funding for the construction of just 10,000 affordable homes over the five-year period, on top of existing commitments (see below).
Under the accord, state and territory governments also committed to building 10,000 new affordable homes, alongside improving zoning and planning regulations and land release for social and affordable housing.
Other help for homebuyers and renters
While the Housing Accord was the major property-related initiative announced, the federal budget also included other commitments promised before the election:
The Housing Australia Future Fund
The $10 billion Housing Australia Future Fund will build 30,000 new social and affordable rental properties in its first five years. Of these:
Each year, the investment returns will be transferred to the National Housing Finance and Investment Corporation (NHFIC) to pay for social and affordable housing projects.
Help to Buy
Another of Labor’s election policies, Help to Buy will help up to 40,000 eligible Australians on low to moderate incomes purchase their first home.
Under the scheme, the federal government will co-purchase up to 40% of a new property (or 30% of an existing home) with an eligible buyer, who will need only a 2% deposit.
Participants won’t need to pay rent on the portion of the home held by the government, and can buy out the government’s share over time or when they sell.
Regional First Home Buyer Guarantee
The Regional First Home Buyer Guarantee was launched ahead of the budget on 1 October. It helps 10,000 eligible first-home buyers per year buy a home in a regional area with a deposit of as little as 5%. At the same time, the federal government guarantees 15% of the purchase price.
The 5% deposit plus the 15% guarantee takes first home buyers to the 20% threshold needed to avoid having to pay lender’s mortgage insurance.
Downsizer super scheme age requirement lowered to 55
The federal government also announced it will lower the minimum eligibility age for downsizer super contributions from 60 to 55 years.
Downsizer contributions let you make a one-off post-tax contribution to your superannuation of up to $300,000 from the sale of your home.
The government is also extending the exemption of home sale proceeds from pension asset testing from 12 months to 24 months, to encourage downsizing, thereby increasing the availability of suitable housing for younger families.
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