Whilst last year’s paramount focus was on “securing Australia’s recovery”, this year’s budget is geared more towards looking forwards building the nation’s “stronger future”. 

And there’s a bunch to look forward to in the real estate industry.

Since housing affordability remains a constant issue among voters, specifically first home buyers, the government is trying to find ways to lend a helping hand to more Australians. In fact, a $2 billion boost is provided in the real estate industry for affordable housing and extra support for first home buyers.  

Treasurer Josh Frydenberg noted that even though the pre-election budget is more focused on the cost of living, the government is also leaning towards getting more Australians into the housing market. “Homeownership is fundamental to the Coalition,” Mr Frydenberg claimed in his speech. “Helping more Australians to own a home is part of our plan for a stronger future,” he continued. 

“The last two years have been tough for our country, there have been setbacks along the way. But Australia remains resilient; Australians remain strong. We have overcome the biggest economic shock since the Great Depression.”

The additional $2 billion budget was the government’s major housing initiative to assist community housing providers in delivering around 8,000 additional social and affordable dwellings. This will also be utilised in the significant expansion of schemes helping first-time buyers who are struggling to save a deposit mainly due to the property price surge. 

Among these schemes include the Home Guarantee Scheme which will double to 50,000 places a year. Under this program, eligible first home buyers are expected to stump up just 5% for their deposit, with the government acting as a guarantor for the remaining 15%. 

This is designed to overcome one of the biggest (if not the biggest) hurdles in purchasing a property: saving for a deposit. It also aids in avoiding Lenders Mortgage Insurance (LMI) for having a deposit under 20%. 

As per the budget papers, there will be 50,000 guarantees per year from 2022/23 and then 35,000 a year as an ongoing measure.

The number of places evidently still falls short of the number of first home purchasers in 2021 which was recorded to reach around 150,000.  PropTrack economist Angus Moore noted then that not every first home buyer needs assistance from the government. 

“But given how in-demand the scheme has been in the past, and the fact that the deposit burden has only gotten harder in the past couple of years as prices have surged, I think we’ll see a lot of demand for the scheme.”

Aside from this, other housing schemes are also planned to be expanded. This includes the First Home Guarantee, the Family Home Guarantee, and the new Regional Home Guarantee.

The First Home Guarantee helps first home buyers purchase a new or existing home with a deposit as low as 5%. From the current 10,000, this will now accept 35,000 applicants each year starting on 1 July 2022.

The Family Home Guarantee, on the other hand, is also set to increase to 5,000 places every year from 1 July 2022 until 30 June 2025. This scheme was introduced in the 2021 budget aimed to help single parents with children buy their first home or re-enter the housing market with as low as a 2% deposit. 

The newest scheme, Regional Home Guarantee, is set to offer 10,000 places every year for first home buyers and people who have not owned a home for five years. This will help those who wish to purchase or construct a new home in regional areas with a minimum 5% deposit. This program will be effective from 1 October 2022 to 30 June 2025. 

Given that the prices in regional areas have outpaced capital cities over the past years, Mr Moore believes that affordability for regional buyers, more likely, has become stretched. 

“Given that run-up in prices, building new homes in these areas will be important, and the Regional Home Guarantee will help with that.”

Real Estate Institute of Australia (REIA) President Hayden Groves stated that Budget 2022, which he welcomed as a Budget “for the times”, painted an optimistic picture for Australia’s immediate future. 

“Budget 2022 should help constrain runaway inflation and provide the right signal for interest rates and assist challenges to housing affordability.”

Arguments on Housing Supply

Even if the 2022 budget for real estate is seen as reassuring for homeownership and all consumers and aspiring ones within the property market, one common denominator that experts think should also be prioritised is supply. 

This is also what Mr Moore sees as a long term solution to affordability. “Schemes like the Home Guarantee Scheme are good as short-term ways to help first-home buyers, but if we’re serious about solving affordability, the only long-term solution is building more homes,” he explained. 

Similarly, the Property Council of Australia (PCA) and the Urban Development Institute of Australia  (UDIA) have welcomed the expansion of the Home Guarantee Scheme. But both claimed that measures to boost housing supply are necessary to help address affordability problems. 

“Unless we boost supply immediately, the looming affordability crisis will be overwhelming – particularly for first homeowners, but also affordable rentals and vulnerable Australians relying on subsidised housing,” UDIA national president Max Shifman said.

PCA Chief Executive Ken Morrison, likewise, agreed that the lack of new houses is one of the biggest variables that drive up Australian homes’ prices. This is despite the fact that these schemes will help people address the huge hurdle of saving up for a deposit. “While we warmly welcome this scheme, it is a demand-side measure and won’t in itself do anything to ease supply-side pressures which are a main driver of affordability issues.”

Mr Groves also mentioned how the budget for homeownership was great but a lot needs to be done to set Australia up for future success. He initiates the same solution in order for the Australian real estate sector to continue to underpin Australia’s prosperity. 

“One of the major areas governments can address housing affordability is to take a leadership role to unlock supply through [the] National Cabinet,” he suggested.

“This is obviously something that needs to be tackled in future Budget cycles with all three tiers of governments as until this is addressed, the right supply mix within our existing housing stock and new homes affordability is unlikely to improve in the near term.”

To help and assist you regarding the schemes mentioned above, contact our Team at 4one4 Property Co. to confirm your eligibility when these programs are implemented.