In a bid to drive post-pandemic economic recovery, the 2021 federal budget has focused on business productivity and jobs but falls short on social and affordable housing measures.
In his budget statement on Tuesday, 11 May, federal treasurer Josh Frydenberg announced a budget deficit of $106.6 billion for 2021-22.
The 2021 budget placed a strong emphasis on infrastructure spending (set to buoy property development). Similarly, funds have been allocated to the aged sector which is likely to spearhead investment in aged care homes. New subsidies in child care are similarly poised to encourage property investment in this area.
The federal government has extended supplementary funding to homelessness services. Other budget measures included resources to single parents and first home buyers.
However, any real support for renters was missing from this year’s budget, with no real investment in social or affordable housing.
All in all, here are the 2021 federal budget measures most likely to change the dynamic of Australia’s residential property market.
An extra 10,000 places added to the First Home Loan Deposit Scheme.
The federal government has extended the First Home Super Saver Scheme, meaning:
- Australians can now contribute up to $50,000 to their super fund to be used for a deposit, up from $30,000 when the scheme was introduced in the 2017-18 budget.
- An extra 10,000 places will be added to the First Home Loan Deposit Scheme. First home buyers who are approved for this scheme can buy or build a new home with a deposit of just 5%.
- Under the Family Home Guarantee, single parents will also be backed to buy a home, with a 2% deposit.
Treasurer Josh Frydenberg said the federal government would also continue its incentive to underwrite lenders’ mortgage insurance for this group of borrowers.
He said these measures would go some way to give first-home buyers a leg up into Australia’s booming property market.
The treasurer also said he would be open to the idea of people using their superannuation to help buy a home.
Change to access age for the downsizer scheme
Retirees will now be able to access the downsizer scheme from the age of 60, down 5 years from the previous 65.
Under this measure, people who are older than 60 and in retirement who sell the family home to contribute $300,000 from the sale proceeds to their super fund, over and above other contribution rules.
Couples will also be able to add $600,00 to their super savings from this scheme.
The HomeBuilder scheme has been extended
Treasurer Josh Frydenberg also extended the HomeBuilder construction commencement period, and the New Home Guarantee.
The government will spend $780 million on additional stimulus to the housing market through the extension to the HomeBuilder Scheme.
“When construction work began to dry up, HomeBuilder came to the rescue. New house starts are now at their highest level in 20 years,” Mr Frydenberg said during his budget address on Tuesday night.
“New loans to first home buyers reached their highest level in nearly 12 years. HomeBuilder has been a huge success. And our $2 billion investment in affordable housing is bringing on more supply.”
A boost to the First Home Super Saver Scheme
Currently, anyone under the scheme wishing to save a deposit for their first home can make voluntary contributions to their superannuation fund, capped at $15,000 a year. This allows them to take advantage of the special tax treatment of super.
The maximum they could save under the scheme is $30,000. In a boost to the First Home Super Saver Scheme, that cap has now been raised to $50,000.
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