How The Federal Budget 2018 Affects Housing Affordability
The 2018 federal budget is causing concern among those looking to buy their first home as it does little to address housing affordability. While there are some measures that seem to have positive benefits for older Australians, younger generations are struggling to find affordable homes, and the budget offers little relief for these potential buyers.
Housing affordability has been on the decline in Australia since the early 1980s. Economics professor Rachel Ong Viforj notes that “intergenerational housing wealth inequality has persisted and widened over decades,” and places the blame squarely on governmental policies like capital gains tax discounts, negative gearing for investors, the exemption of owner-occupied housing from land tax, and the exemption of the family home from means tests that determine eligibility to pensions and allowances. All of these have “fuelled over-investment in housing assets and favoured existing property owners over aspiring home purchasers.”
She maintains that there is a lot of work to be done in an effort to improve housing affordability for everyone, and says that the “balance of opportunity for property ownership” must be restored. She further notes that “despite repeated calls and recommendations on this front, fundamental tax reform has remained elusive in successive government budgets.” Certainly it is not prioritised in the 2018 budget, which provides multiple measures that have the same effect on the housing market as the policies that Viforj describes in her assessment.
This being said, there are still a number of positive aspects in terms of government policy that potential homebuyers can feel good about, including:
Housing planning reforms in Victoria
The Victorian Labor government has announced new planning regulations between councils and developers that will help to support the creation of affordable housing in major residential developments, particularly social housing.
ACT scraps stamp duty
Canberra’s first-home buyers will no longer have to pay stamp duty, thanks to the ACT Government’s ongoing plans to end the scheme altogether. In exchange, the territory’s First Home Owner Grant payments will also cease.
Keystart Home Loans in WA
Established in 1989 to provide low-deposit home loans to West Australians that are unable to meet the deposit requirements from mainstream lenders, Keystart counts the WA Housing Authority as a shareholder, and offers both first and non-first home buyers across WA a variable interest rate loan towards their property.
On a wider scale, the federal government is divesting some Commonwealth property currently owned by the Australian Communications and Media Authority and making it available for purchase. This buildable land can support up to four hundred homes, providing additional housing for families in the Brisbane metropolitan area.
The government also plans to spend up to $4.8 million in the next four years to assess what some are referring to as a housing crisis. The Australian Bureau of Statistics will be charged with providing more accurate estimates of the availability of affordable housing throughout the country. They hope that this will give a clearer picture of the true nature of the current housing problem.
One final thing to note is that the 2018 budget doesn’t have provisions for the superannuation savings scheme introduced last year that allowed first-time home buyers to make voluntary contributions to their super account, and later withdraw the accumulated funds to use for a down payment on a home.
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