The 2021 Federal Budget - What Does It Mean For Real Estate?
Five major housing related measures were announced in Treasurer Frydenberg’s Federal Budget 2021-22 address on the 11th May; An extension of the New Home Guarantee, a bolstering of the First Home Super Saver scheme, the introduction of the Family Home Guarantee, an extension of the HomeBuilder program and additional funding for infrastructure projects across Australia.
In this article we’ll take a look at each of the Federal Budget housing package measures announced to help you understand what may be available to you.
Additional 10,000 spots under the New Home Guarantee
The Federal Government is providing a further 10,000 places under the New Home Guarantee in 2021-22, specifically for first home buyers seeking to build a new home or purchase a newly built home with a deposit of as little as five per cent.
“The Government Guarantee offers significant assistance to first homeowners as it accelerates their ability to get a foothold in the property market. The reduced minimum deposit requirement (5% v 20%) coupled with various stamp duty exemption schemes delivered by State Governments will act as a significant drawcard for first home buyers,” said Eddie Law, CEO McGrath Estate Agents.
To find out more about applying for the New Home Guarantee click here.
Bolstering the First Home Super Saver Scheme (FHSS)
From 1 July 2022, first home buyers are able to make voluntary super contributions of up to $50,000 into their super. They can then withdraw this amount (plus earnings, less tax) to help with a deposit on their first home. This contribution has been increased from $30,000 following the Federal Budget announcement.
“Any addition to this scheme will be welcome. With property’s average price point increasing across most States it is sensible that any deposit saving initiative be bolstered to take into account the relative growth in the average purchase price of a home” said Mr Law.
Family Home Guarantee
In an attempt to help single parents achieve financial security for their families, they will now be able to access a Family Home Guarantee which will allow 10,000 applicants over four years eligible to purchase a home with as little as 2% deposit.
One of the biggest hurdles to get into the housing market for single parents on single incomes is getting their deposit together. The Family Home Guarantee will enable single parents to jump that hurdle.
The program will be a significant help to single parents trying to get into the housing market. “This is a sensible, well targeted initiative to facilitate single parents either access or progress up the property market” said Mr Law.
Importantly it won’t just a be a program focused on first home buyers, it will also support those hoping to re-enter the housing market.
Extension of HomeBuilder construction period
The Federal Government has extended the popular HomeBuilder program to give people who have already applied an extra 12 months to start their build or renovations.
HomeBuilder is a time-limited grant program designed to boost the private construction sector. The government extended the six-month construction commencement period to 18 months which will smooth the HomeBuilder construction activity into 2021 and into 2022.
It is anticipated this will support over $30 billion in residential construction activity.
Extending access to the downsizer contribution
From 1 July 2022, the minimum age for the downsizer contribution will be lowered from 65 to 60, allowing Australians nearing retirement to make a post-tax contribution of up to $300,000 per person when they sell their family home. This will provide greater flexibility for people to contribute to their superannuation and free up more housing stock for younger families.
Around 22,000 individuals have already made downsizer contributions under the existing rules.
Additional infrastructure investment
The Federal Government is committing an additional $15.2 billion to infrastructure projects over the next ten years which will support over 30,000 jobs over the lives of those projects. This builds on the 100,000 jobs already being supported by projects currently under construction through the existing pipeline.
The key projects to be funded by the Federal Government include:
- $2 billion of initial investment for a new Melbourne Intermodal Terminal
- $2.03 billion for Great Western Highway Upgrade - Katoomba to Lithgow - Construction of East and West Sections in New South Wales
- $400 million for Inland Freight Route (Mungindi to Charters Towers) Upgrades in Queensland
- $161.6 million for the Truro Bypass in South Australia
- $160 million for Agricultural Supply Chain Improvements - Package 1 in Western Australia
- $150 million for National Network Highway Upgrades (Phase 2) in the Northern Territory
- $80 million for Bass Highway Safety and Freight Efficiency Upgrades in Tasmania
- $26.5 million for William Hovell Drive Duplication in the Australian Capital Territory
McGrath Limited and its subsidiaries, together with their directors, officers, employees and agents have used their best endeavours to ensure the information passed on in this document is accurate. However, you must make your own enquiries in relation to the information contained in this document and seek advice from your financial advisor, broker or accountant to ascertain its application to your circumstances.
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