Housing Affordability is a key part of the recent Federal Budget, the Albanese Government’s first since coming into power in May.
We take a look at why the Budget prioritised housing affordability and what it means for buyers and sellers here in the eastern suburbs.
Why housing affordability is a key issue in the latest Federal Budget
Australian housing affordability and availability have been making headlines recently. October’s Federal Budget focused on cost of living relief, with a particular spotlight on ‘more affordable housing.’ Homebuyers and renters across the country, are facing high house prices, shrinking vacancy rates and rising rents and our area is not immune.
Take South Coogee, for example. House prices there have risen an astonishing 70.2% in the past three years. In Clovelly, median house prices have skyrocketed 58.9% since October 2019. Units have also seen significant price gains over the last three years, with median prices climbing by 22.2% in Randwick and 20.8% in Maroubra, for example.
Local renters are also under pressure, with house rents in Maroubra up 13% over the last year and units 10.9%, while vacancy rates have hit a very tight 0.7%. It’s a similar story in Clovelly, where house rents are up a huge 19.2% in the past year, while vacancy rates hover at 0.7%.
How does the Budget address housing affordability?
Numbers like these are being replicated around the country, and that’s no doubt what prompted the announcement of the government’s new Housing Accord in the Budget.
The Accord promises to deliver one million new affordable homes over five years from 2024. The Accord will encourage institutional property investors, such as superannuation funds, to invest in affordable housing by providing government funds to make up the shortfall between the subsidised rents the new homes will command and market rents. The government promises the new homes will be built close to transport, jobs and amenities. The Accord includes commitments from state and local governments to speed up zoning, planning and land releases to make this a reality.
Whether our Park Coast East area will gain any new housing under the Accord is yet to be seen – no details have been released about where the new homes will be built.
The Budget also included funding commitments for several previously announced policies designed to ease housing affordability. The National Housing and Homelessness Plan will address the key reforms needed to make it easier for Australians to buy or rent a home and to help more Australians out of homelessness. Meanwhile, the National Housing Supply and Affordability Council will be established to advise the Commonwealth government on housing policy, and the Housing Australia Future Fund will provide an ongoing funding source to increase the supply of social and affordable housing. A portion of the homes built under the Fund will be earmarked for frontline workers, women and children impacted by domestic and family violence, and older women at risk of homelessness.
Although many Australians are facing housing challenges, the Budget Papers say that Australian housing affordability is currently at or better than the OECD average, and it is stable and improving. This is an encouraging sign of a return to a balanced and sustainable property market, which stands to benefit sellers, buyers and investors alike.
What was announced in the Budget for first-home buyers?
The government’s cornerstone policy to help more Australians into home ownership is the Help to Buy shared equity scheme. Under the scheme, the government will cover 30% of the purchase price of an existing home or 40% of a new home. Buyers only need a deposit of 2%, and they’ll have a smaller mortgage and smaller repayments to contend with. Homebuyers will share ownership of their home with the government, and when they sell, the government will recoup its equity and share of any capital gains made. Owners are able to increase their equity over time by buying it back from the government.
Who’s eligible for Help to Buy? Singles with annual incomes of up to $90,000 or couples with a combined income of $120,000 or less. The scheme isn’t restricted to first home buyers, but participants must not currently own a residential property. The property price cap for homes bought in Sydney under the scheme is $950,000.
The Budget also pledged $46.2 million to help current and former Australian Defence Force members to buy their own home, via the Defence Home Ownership Assistance Scheme. The Regional First Home Buyer Guarantee has also been introduced to assist those who have lived in a regional area for at least 12 months to buy their first home.
Did the Budget include any announcements for downsizers?
The government is incentivising downsizers to sell the family home and move to a smaller property to free up more housing stock for younger families. The Budget announced that the proceeds of a home sale will now be exempt from pension asset testing for an additional 12 months, extending the total exemption period to two years. This means pensioners will have additional time to buy, build or renovate a new home before their pension is impacted. Access to downsizer super contributions is also being made available to people aged 55 to 59 for the first time.
Source: Director, Auctioneer Adrian Bo