Tuesday’s budget announcement will see this year’s spending focusing largely on getting Australians back to work and spending again, but there are some positive outcomes for the property market.
An extra 10,000 places in the Government’s First Home Loan Deposit Scheme will be available to first-home buyers this financial year, only accessible to those looking to purchase brand new homes. This will allow more opportunity for eligible first home buyers, only needing a 5% deposit to secure a loan, with the government guaranteeing the remaining 15% of the loan. An adjustment has been made in the scheme’s price cap too for Sydney, increasing to $950,000 to reflect the city’s higher property prices. This announcement will definitely assist first home buyers and is likely to be more beneficial to the house and land sector, rather than the apartment sector.
The spending also includes additional funding of $1 billion to help promote the building of more affordable housing. The budget appeared to leave out landlords and investors though, who have been covering the cost of rent reductions and the government’s moratorium, which was introduced early into the pandemic.
The housing market may also receive an additional boost from the tax relief announced by Treasurer John Frydenberg, reporting there will be a $12.5 billion tax cut in personal income over the next 12 months. This will provide 11.6 million individuals with a tax cut in 2020-21, and for middle income earners, the relief will total up to $2,745 a year for singles and up to $5,490 for couples. A one-off additional benefit, worth up to $1,080 per individual, will be also available to more than 10 million taxpayers. The tax cuts will improve loan serviceability, allowing potential purchasers more money in their pocket. Tax breaks will also help existing home owners pay down their mortgages sooner.
With buyer demand strong, property prices stabilising, and Christmas fast approaching, if you have property plans, now is a great time to get the conversation around next steps. Reach out to us on 02 4504 8004 so we can help you.