The Australian Federal Budget 2023-24

How will the Budget help the property market?

Exciting times lie ahead for potential property buyers as the Australian economy experiences a long-awaited surplus of $4.2 billion in FY2023. This can be attributed to the positive global commodity market and the strongest job market in 40 years. Despite the challenge of high inflation, the government is committed to tackling cost-of-living concerns by injecting approximately $15 billion in incentives and welfare.

In response to the national rental crisis, fast-recovering population growth, and constrained housing supply, the government has introduced measures in the FY2023-24 Budget to address the housing shortage and affordability.

The Federal budget is designed to support first-home buyers, increase property supply, and stimulate residential construction.

Top five highlights for the property market:

  1. First-home buyer (FHB) help: Home Guarantee Scheme (including First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee) eligibility criteria expanded to 50,000 places.
  2. Rental relief: Commonwealth Rent Assistance (CRA) to increase 15% for over 1 million low-income renters.
  3. Low-income support: More funding for NHFIC loans to build 7,000 social and community housing dwellings with $2 billion on extra social and affordable housing.
  4. Investing in Build-to-rent (BTR): New tax breaks for BTR projects which could add up to 150,000 rental dwellings over the next decade.
  5. Investing in infrastructure: Building target of 1 million new homes over 5 years starting 2024 through the Nation Housing Accord.

Home buying incentives

The Budget has introduced a plan to broaden the reach of the Home Guarantee Scheme, benefiting both first-home buyers (FHBs) and non-FHBs who haven’t purchased a property in the last decade. This expansion allows any two applicants, whether they’re siblings, parents and their children, or even friends, to jointly apply for the scheme. Single legal guardians of dependents such as aunts, uncles, and grandparents may also now qualify for the Family Home Guarantee.

First Home Guarantee – First Home Buyer help

Formerly known as the First Home Deposit Scheme, this scheme allows first home buyers to build or purchase a newly built home with a deposit as low as 5%, without having to pay Lenders Mortgage Insurance (LMI), as the government will guarantee the remaining 15% deposit.

Family Home Guarantee

Like the First Home Guarantee, the Family Home Guarantee scheme allows single parents with dependents to purchase a property with an even lower deposit of 2% without paying LMI. They are also able to purchase established as well as new properties under the scheme.

Regional Home Guarantee

This new initiative although similar to the First Home Guarantee, the key difference is that this scheme is offered to permanent residents, as well as Australian citizens.

First Home Super Saver Scheme

The existing scheme allows first homeowners to make voluntary contributions to their Superannuation for the purpose of saving a deposit for their first property has now been increased to $50,000. This is a great initiative as the voluntary contributions will be taxed at 15% rather than the marginal tax rate.

Commonwealth Rent Assistance

Over 1 million Commonwealth Rent Assistance (CRA) recipients will benefit from a 15% increase in the maximum rental assistance payable, the largest increase in 30 years. With one in three Australian households that rent more likely to be younger and on lower incomes, this will bring some relief.

However, for many – and particularly for those who have moved recently – it will not cover enough. Advertised rent increases have averaged 13% nationally for capital city houses and 22% for capital city units (Domain Rent Report).

Low income support

The rising cost of housing is hitting both renters and mortgage holders hard. According to CHOICE, back in January 2021, 46% of mortgage holders and just over half of renters (51%) said the cost of housing was a concern. This year, the level of concern has jumped to 78% of mortgage holders and 72% of renters.

The Budget aims to alleviate these cost pressures with increased rental relief and low-income support through its $14.6 billion Cost of Living package. This will include a one-off $500 electricity bill deduction, and a modest increase in Centrelink support payments such as JobSeeker, Youth Allowance, and Austudy.

“The Budget we present to the Australian people…provides cost of living relief that is responsible and affordable and prioritises those most in need” – Federal Treasurer, Jim Chalmers

Housing market Outlook

Additionally, the government’s ambitious plan to build one million new homes from 2024 through the National Housing Accord addresses the growing demand for housing in the country.

As we navigate these new developments in the housing market, it is essential to focus on building more homes to cater to our growing population. The measures introduced to boost rental supply and affordable housing through social housing and build-to-rent projects will have long-term benefits.

The rental assistance and increased support payments, while modest, provide immediate cost relief to many Australians. It is crucial to continue addressing the housing shortage and affordability concerns by investing in housing initiatives and encouraging the construction sector.

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