Federal Budget: What does this mean for property

Federal Budget: a property lens

By Jarrod McAleese

On Tuesday 11 May, Treasurer Josh Frydenberg delivered the Federal Budget for 2021-22 – undoubtedly one of the most important in Australia’s history, as our nation continues to stabilise in the aftermath of COVID-19.

In its budget overview, the Government stated that “our economy has recovered strongly and is set to return to pre-pandemic levels nine months earlier than expected last Budget with the unemployment rate’s recovery set to be five times faster than the 1990s recession.

It also noted that while “we are not yet out of the pandemic, we are better placed than most other countries in the world to meet the economic challenges that lie ahead.” Underpinning this rebuild is property – Australia’s most valuable asset class, worth $7 trillion.

As widely reported, the market has been red-hot thus far in 2021, with sales settlements up 38% year-on-year, according to the latest analysis from PEXA.

Understandably, there was significant interest in the Federal Budget’s commitments to the property sector, on the back of the current momentum within industry.

Here’s our summary of the budget and the key announcements relating to property.

HomeBuilder

HomeBuilder provides eligible owneroccupiers (including first home buyers) with a grant of $25,000 to build a new residence or substantially renovate an existing dwelling. The initial six-month construction commencement period has now been extended to 18 months for all existing applicants.

New Home Guarantee

The New Home Guarantee initiative supports first homeowners with building or purchasing a new home, while only requiring a deposit of 5%. An extra 10,000 places will be available under this scheme to first home buyers in 2021-22.

Family Home Guarantee

The newly established Family Home Guarantee is designed to enable single parents with dependants to enter or re-enter the housing market. 10,000 places will be made available over four years to eligible applicants, to build a new home or purchase an existing home with a deposit of as little as 2%.

First Home Super Saver

The First Home Super Saver (FHSS) scheme was introduced by the Australian Government in the Federal Budget 2017–18 and enables consumers to save money for their first home inside their super fund. Beginning 1 July 2022, the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme will increase from $30,000 to $50,000.

The year ahead

These newly introduced measures, in addition to the expansion of existing schemes, will provide valuable support to Australia’s home buyers and sellers. And this portfolio of funding within the budget, alongside the continued high-volume of sales settlements nationwide, suggests that the ongoing market rush will remain for the foreseeable future.