Josh Frydenberg announced the budget for the 2022-2023 financial year. Announced just a few months out from an election, the budget gives priority to factors such as food recovery, homeownership and the rising cost of living.
What does this budget mean for first-time homebuyers? What is the budget impact on first home buyers in Australia?
The dream of buying a home has slipped further out of reach for many first time home buyers in Australia, thanks to the skyrocketing property prices across the nation.
In this blog, we will highlight the measures included in the federal budget that can help aspiring homeowners, as well as the efforts by the government to address the housing affordability problem in Australia. Let's understand the budget impact on first home buyers in Australia!
The Expansion of the First Home Guarantee Scheme
One of the key highlights of the 2022-23 budget is the expansion of the First Home Guarantee Scheme. Under the expanded program, the Australian government has increased the number of places from 10,000 to 35,000 per year, with one in five scheme spots reserved for regional Australians.
With this updated scheme in place, both Australian citizens and permanent residents who haven't purchased a home for years will be encouraged to purchase either existing property or build a home of their own.
Here are the key highlights of this improved program...
The improved First Home Guarantee will also enable new homeowners to put down 5 per cent of the deposit without being hit with a lender's mortgage insurance. And the government will act as the guarantor for this loan.
Who is Eligable?
To become eligible for the expanded First Home Guarantee Scheme, you should have a taxable income of up to $125,000 per annum for the previous fiscal year. The couples are required to have an income of up to $200,000. Besides, they should have previously been qualified for the First Home Loan Deposit Scheme.
You don't have to be a first time home buyer to become eligible for this scheme, meaning you can still opt for this program if you have owned a property in the past, but don't currently own one.
There are no changes in price caps. However, they may vary based on the area you live. Refer to the table below to see the price caps of your area under the First Home Guarantee Scheme.
|State/Territory||Price cap in capital city (and major regional centres in NSW, VIC and QLD)||Price cap in the rest of the state/territory|
(Source: ABC News)
Understand the impact of this
Nearly 60,000 aspiring home buyers are already opting for the government guarantee to buy their dream home. The expansion is likely to reduce the time required to save a deposit to buy a home. For example, it takes an average Sydney couple more than 8 years to save a 20 per cent deposit for an entry-level home as revealed in one report. Their Melbourne counterpart will take four years and 10 months.
What are the Other Housing Measures in the Budget?
Apart from the expansion of the First Home Guarantee Scheme, the government has introduced other reforms in the budget, including a $2 billion investment in the National Housing Finance and Investment Corporation (NHFIC) to increase the lending capacity.
The NHFIC provides low-cost loans to community housing providers to promote the supply of affordable housing.
The raise in NHFIC's liability cap, from $3.5 billion to $5.5 billion, will help vulnerable Aussies with 10,000 more affordable homes. Other investments include an estimated $1.6 billion for the National Housing and Homelessness Agreement to provide access to safe and sustainable housing options.
The Bottom Line:
With the expansion of the Home Guarantee Scheme, paired with the First Home Super Saver Scheme and Home Builder, the government is helping thousands of Australians to fulfil their dream of owning their own home. In a nutshell, the budget impact on first home buyers in Australia is positive.
If you have become eligible for this new improved scheme and are looking to build your new home, make sure to work with the right and experienced professionals.
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