For those looking to buy or sell this year, what are some of the key takeaways from the federal budget for property – and how will the changes affect you?
While the release of the annual budget is always a major milestone that reaches all corners of the Australian political and economic landscape, it’s arguably never had so much riding on it. Although the government has faced slightly less pressure when compared to last year’s version, Australia’s economic rebound from the COVID-19 pandemic has given those in power slightly more money to play with than what was initially forecasted.
The good news is that along with a change in our spending habits thanks to no international travel, record low interest rates have kept Australia’s real estate sector moving. It’s only natural – and logical – that the federal government would want to keep this momentum going, and in turn, this is reflected in the inclusions in the budget for property.
How The Budget Will Affect First Home Buyers
We can now refer to 2020 as many things, and “surprising” is a term that can be applied to the Australian property market in regards to its resilience. COVID-19 appeared to be more of a temporary pause as opposed to the cataclysmic hit to the real estate sector that was initially predicted. Although it’s changing how and where we live, 2020 saw Australians pocket an unprecedented $110 billion in personal savings.
Cashed up with pre-approvals and sizable deposits, our real estate market is expected to hit double digits in terms of growth patterns for 2021. However, many buyers have seen themselves getting “outpriced” in an extremely hot market, meaning that the number of buyers are far exceeding the number of properties currently up for sale.
On Tuesday night, Treasurer Josh Frydenberg released the hotly anticipated 2021 federal budget for the year ahead. In fact, he even went as far as stating to parliament that “under the Coalition, home ownership will always be supported” – so what are the key takeaways from the budget for property and real estate?
First Home Loan Deposit Scheme – The First Home Loan Deposit Scheme (FHLDS) is an Australian Government initiative to support eligible first home buyers to build or purchase a first home sooner. While buyers are usually required to save a 20% deposit or otherwise pay Lenders Mortgage Insurance, under the FHLDS, eligible first home buyers can purchase or build a new home with a deposit of as little as 5%, with the government actually guaranteeing the remaining amount. In this year’s budget, the government has boosted this by adding an extra 10, 000 places to the scheme from July 1 2021, but this time for new and existing homes.
First Home Super Saver Scheme – The First Home Super Saver Scheme (FHSSS) helps Australians boost their savings for a first home by allowing them to build a deposit inside superannuation, giving them a tax cut. The FHSSS applies to voluntary superannuation contributions made from 1 July 2017. Under the new budget, the First Home Super Saver Scheme has been expanded to allow eligible first home buyers to release up to $50, 000 of their superannuation to purchase a home, up from the previous cap of $30, 000. The scheme has been designed to encourage younger Aussies to save, and in turn be taxed less accordingly.
Family Home Guarantee – Riding on the back of the success of the First Home Loan Deposit Scheme, the federal government has now launched a new initiative known as the Family Home Guarantee. Aimed at getting single parents into their first home, eligible participants will be able to build or purchase an existing home with a deposit of as little as 2%, and isn’t restricted to first home buyers. Although the guarantee will be open for applications from July 1, 2021 and will offer 10, 000 places over four years, applicants will still need to prove their ability to comfortably pay back a mortgage on their own and to meet the criteria of individual lending providers.
Taking Advantage Of The Budget For Property
Getting on top of your paperwork, dealing with lending providers and trying to source the best deal can be an extremely stressful experience, particularly if you’re a first home buyer – but the good is that it doesn’t have to be.
With a background in banking, finance, business development and project management, there’s no better advocate to have on your team than Nikki Berzin. As a fully qualified mortgage broker and director of Cherry Lending & Finance, Nikki is passionate about all things finance, and empowering her clients with the tools to hit their property goals is what she does best.
However, Nikki is also passionate about her community. As a Mornington Peninsula resident for over two decades, she’s also worked extensively with the local emergency services sector. With family in the police force and her own experience working as a firefighter, she understands the long hours and stress that comes with the industry – and it’s for this reason that she specialises in helping emergency service workers get into the property market.
If you’re looking to get into your first home, purchase an investment property or even want to look at your options for refinancing, the first step is starting the conversation. Get in touch with Nikki today, or call her directly on 0427 374 155 to bring your mortgage dreams to life.