BUDGET LIFT FOR BUYERS

First home buyers are the winners with new federal schemes revealed

THIS week saw every accountant’s favourite night of television for the year – federal budget night.

After a turbulent 12 months that’s seen the country emerge far stronger than expected (while leaving a number of soft spots throughout the economy), the focus has been on what the Morrison government would put forward to steer Australia back toward its pre-COVID trajectory as well as addressing those issues that were already underlying but have been brought to the fore.

An extension of tax cuts for another year means that a large number of eligible taxpayers will see a benefit of up to $1080, though this looks like the end of it after the upcoming year.

Businesses should continue to see further investment too as JobMaker initiatives like asset write-offs on new equipment also see an extension – putting new tools, machinery and technology in more hands and offering a flow-on effect to other sectors.

On the housing front, more money has been put behind getting people into their first homes, with a further 10,000 spots to be released for the successful First Home Loan Deposit Scheme.

With house prices rising and the deposit often the biggest hurdle for buyers, this has allowed first home buyers who have saved a minimum of 5 per cent deposit to purchase their first home without the added cost of Lender’s Mortgage Insurance (LMI), which typically applies when a borrower has a deposit less than 20 per cent of the property’s value. Otherwise costing thousands of dollars (or flat out acting as a barrier to purchase), this system has been a cost effective way for the federal government to support home ownership without a significant cost to itself – so positive all around.

Beyond this scheme, there has been the introduction of the Family Home Guarantee, a new program designed to help single parents to either enter or re-enter the property market.

Based on the same principles as the First Home Loan Deposit Scheme, this allows eligible applicants to purchase with as little as 2 per cent deposit, again avoiding costly LMI. Recipients must still be able to otherwise cover their borrowing costs and repayments so it isn’t a straight handout, but again helps a segment of the market that can already be disadvantaged.

Starting with 10,000 places over four years, it will be interesting to see whether this scheme sees the same level of success.

And while applications may be closed, we’ve seen further figures on the success of the HomeBuilder grant, with 120,000 applications processed and this money to continue flowing through the local economy.