How the announced federal budget will affect the property market in the future
Every year the federal government passes a budget for the nation’s projects and expenses. Because of what has transpired these past several months, the budget will largely focus on getting Australians back to work to be able to support the economy. Individuals are highly encouraged to spend more as well, and what better way to do that than to provide Australians more means to do so.
The pandemic caused disruption in our lives in such a significant way. The economy needs to recover from the health crisis. Fortunately, the property sector is looking to have quite a positive future ahead.
A few months ago, we talked about the Australian government’s initiative to help first-time homeowners build the house of their dreams, which was called the HomeBuilder Grant. This was designed during the pandemic to be able to provide financial support for individuals planning to build a new home or make upgrades. A few days after the announcement, skyrocketing sales and inquiries were reported. Overall, there was a positive response. The response was overwhelming which quite possibly resulted in the federal budget’s extension of the FHLDS or First Home Loan Deposit Scheme.
The budget announcement last Tuesday will directly impact industries. How it’s going to impact property could both directly and indirectly.
Here are the takeaways to be noted that will affect the property market.
First-home buyer incentives
The first-home loan deposit scheme was designed for first-time homebuyers with deposits as low as 5% to acquire a home loan without paying Lenders Mortgage Insurance fees. With the budget announcement, an extra 10,000 places will be available to first home buyers in the federal government’s First Home Loan Deposit Scheme that will be limited to new home builds. The new scheme entitles eligible homebuyers the said deposit to acquire the loan without having to pay for the LMIF. The federal government will be guaranteed 15% of the loan for the eligible buyers.
The budget announcement also included something for affordable housing. The federal government will also provide an additional $1 billion through the National Housing Finance and Investment Corporation. This funding will support the construction of affordable housing throughout the nation.
Indigenous home buyers support
An additional investment of $150 million to extend the indigenous Home Ownership Program, which was established to assist indigenous Australians into homeownership. The investment will deliver 30 construction loans in regional Australia, which would definitely boost the property market.
House hunter tax cuts
This feature will indirectly impact the property market for both the short-term and long-term. The already legislated personal income tax cuts are now brought forward to the second stage. The tax cuts are said to benefit about 11.6 million Australians. According to the new budget announcement, it will be backdated t July 1st this year instead of July 2022.
As for single middle-income earners, they will be given tax relief up to $2745 while dual-income families will receive up to $5490. There will be an additional benefit available for more than 10 million taxpayers worth up to $1080 per individual.
The main goal of the government is to be able to give more money to Australians for a potential increase in prospective homebuyers, as tax breaks are indeed very helpful.
The budget also includes measures that will definitely encourage more jobs to be created, which includes the following:
Job-ready Graduates Package that was created for domestic students to have a place in Australian Universities;
Modern Manufacturing Strategy;
Research and Development Tax Incentive
With all of this in place, more homebuyers will have the motivation to spend more on new homes that will help the Australian economy to recover faster.