Now that the Morrison Government’s hotly anticipated 2022 Budget has been released, what does it mean for buyers and sellers competing in the property market?
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. As a nation, we’ve fared significantly better than originally predicted – but with an upcoming election, the Federal Government has spared no expense with outlining a financial plan designed to benefit all Australians.
With addressing the rising cost of living being the key focus of the 2022 Budget, a major part of the conundrum is tackling housing affordability, particularly for first home buyers. Along with natural disasters, national security and surging fuel prices, home ownership was also firmly in the spotlight in the 2022 Budget – so what’s changed?
How The 2022 Budget Will Influence Real Estate
While the 2022 Budget has placed the focus on the cost of living, Treasurer Josh Frydenberg said the government is helping more Australians get into the housing market. Alongside Prime Minister Scott Morrison, it should also be noted that this is a man outlining a plan with the intention of keeping his job in the upcoming federal election.
“Home ownership is fundamental to the Coalition,” Mr Frydenberg said in Tuesday night’s budget speech. “Helping more Australians to own a home is part of our plan for a stronger future.”
The budget’s major housing initiatives were the additional $2 billion to help community housing providers deliver approximately eight thousand more social and affordable dwellings, and a significant expansion of schemes helping first-home buyers struggling to save a deposit as property prices surge, with the most noteworthy being the expansion of the First Home Loan Deposit Scheme.
The First Home Loan Deposit Scheme (FHLDS) was first released on January 1, 2020, and 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.
Originally offering 20,000 government guarantor style loans, the scheme was set to expire on June 30 2022. However, changes outlined in the 2022 Budget have not only expanded the time frame, but has more than doubled the availability. In the new update, there will now be 50,000 guarantees per year for three years from 2022/23, and then 35,000 a year as an ongoing measure.
The Family Home Guarantee, which was first introduced in the 2021 Budget as a means to help single parents with children to buy their first home or re-enter the market with a deposit as low as 2%, will also increase to 5,000 places per year until 30 June 2025.
However, one of the major changes for home buyers to take note of is the introduction of the Regional Home Guarantee. As a new scheme designed to provide relief to those purchasing a home in the booming regional areas of the nation, it will provide 10,000 places per year for first home buyers and people who have not owned a home for five years. Running from 1 October 2022 until 30 June 2025, the Regional Home Guarantee will assist applicants to buy a newly built home in a regional location with a minimum 5% deposit.
While all of the above announcements will no doubt be welcomed by first home buyers, industry experts have indicated that this still isn’t enough to tackle rising house prices. The time it takes to save for a deposit has ballooned in line with the skyrocketing sales figures, with many commenting that the schemes are short term measures that don’t actually address ongoing affordability.
If you’re looking to break into the property market, it’s never been more important to partner with a reputable mortgage broker. Taking on a loan that’s more than you can afford is a surefire way to set yourself up for a potential disaster, so getting the right advice in navigating your options can be a game changer.
Taking Advantage Of The 2022 Budget Changes For Property
Getting on top of your paperwork, and dealing with lending providers 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.
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.
