What the Federal Budget means for the property market
It can take some mental gymnastics to figure out how the Federal Budget effects your life.
Don’t worry. We’ve got the full rundown on the important housing and real estate changes, and how it could impact your future decisions in the property market.
We’re giving you the facts now because many of the changes announced in that chunky fiscal document will come into effect on 1 July.
At a glance, single parents, first home buyers and homeowners over 60 who are looking to downsize are the winners of the budget. The Government’s aim is to maintain the economic momentum by increasing the number of buyers and houses in the market.
So, what does this really look like for you and your family?
Family Home Guarantee for single parents
Single parents with dependent children can purchase a house with a 2% deposit. The Government will act as guarantor on the loan, removing the need for Lenders Mortgage Insurance (typically applied for buyers with a deposit of less than 20%).
What does this mean for me?
As of 1 July, the Government will make 10,000 places available over four years for single parents earning less than $125,000 annually. This offer is not limited to first home buyers, however, you will not be eligible if you’re a current homeowner.
For example, if a single parent is looking to buy a home (not an investment property) for $450,000, they will only need to pay a deposit of $9,000 and the Government will make up the remaining amount.
“The Family Home Guarantee will make a huge difference in the lives of single parents around the country. However, it will take some time to see the full impact of the scheme,” Impero Conveyancing Founder, Felicity Eastwood said.
More opportunities for first home buyers
First home buyers struggling to save for a deposit finally have a glimmer of hope amongst the surging property prices. The First Home Buyers Loan Deposit Scheme will be extended to include the New Home Guarantee.
What does this mean for me?
This means that as of 1 July, 10,000 places will become available in the 2021-22 financial year for first home buyers to purchase a new home with a 5% deposit.
The Government will be guarantor for the remaining 15% and cover the Lenders Mortgage Insurance that would usually apply for borrowers with less than 20% deposit.
To be eligible for this scheme, first home buyers can only build or purchase a new home.
“This scheme is aimed at helping low to middle income earners break into the market and by only releasing 10,000 spots, the Government are stimulating a sense of urgency,” Fiona said.
“The intention is to boost the economy through new construction initiatives, putting minimal pressure on house prices while improving the housing supply.”
Over 60 and considering downsizing?
This section of the budget caters to the Australians at the other end of life; the empty-nesters.
From 1 July, individuals aged 60 years and older will become eligible to make a one-off, post-tax contribution of up to $300,000 (or $600,000 for couples) to their superannuation fund from the proceeds of selling their home.
According to the budget documents, the Government wants them to “consider downsizing to a home that better suits their needs, thereby freeing up the stock of larger homes for younger families”.
The only difference between the 2021 version of the Downsizer Superannuation Scheme to the one announced in the 2017-18 budget is the reduction of the eligible age from 65 to 60 years of age.
“This change opens up the housing market to more Australians and encourages this demographic not to put off selling their big family home,” Fiona said.
“Through this adjustment, more people can contribute to their retirement funds and not worry about the tax implications.”
Will these changes help?
Economists are forecasting the Australian property prices to rise by 10-17% nationally by the year’s end.
This statistic is scary for everyone, except for vendors. It’s definitely a vendor’s market at the moment and it’s reassuring that the Government is noticing the imbalance.
Many buyers, especially first home buyers, are being left out in the cold. We hope that these changes can be the move the market needs in bridging the deposit gap.
The 2021-22 NSW State Budget will be handed down on Tuesday 22 June and is expected to include more changes that stimulate the economy and introduce more people into the property market.
We’ll be providing updates with the NSW State Budget announcements later in the month. In the meantime, if you have any questions about how this year’s Federal Budget may affect you contact us on 4910 0522 or email us at firstname.lastname@example.org.