What Does the 2018 Budget Mean for Housing Affordability
Whether you’re a first home buyer or an empty nester thinking about downsizing, the latest budget could affect the decisions you make. We give you a top-line summary of the changes to be expected and how they may affect your circumstances.
One of the main highlights of the 2017 budget was that it focused on the housing woes of the younger generation by delivering a housing package aimed at tackling housing affordability. The First Home Super Savers scheme, incentivising of investment in affordable housing and removing the barriers to downsizing were measures expected to free up housing for younger home buyers entering the housing market.
But housing affordability didn’t seem like a high priority in the 2018 Budget.
What’s in it for first home buyers?
There’s no attempt to provide further relief for struggling property seekers in this year’s budget. Though, young Australians can still benefit from the measures announced in last year’s budget, like the superannuation savings scheme, which allows Aussies to store their savings in their super funds tax-free for a house deposit.
In fact, of the significant Budget measures that will affect those looking to get a foothold in the housing market, most work against them.
While past Budgets have proposed rewarding down-sizers to free up larger homes and make way for emerging families, this one encourages older Australians to hang onto the family home.
Expanding the Pension Loans Scheme impacts the young and old.
Expanding the pension loan scheme, now allows pensioners to borrow against the value of their home and other assets without selling up. This flexibility to convert their home equity into an income stream to fund retirement needs might encourage older homeowners to hang onto their properties.
A reverse mortgage scheme may likely weaken incentives for seniors to downsize into smaller properties. With fewer people downsizing that will increase the scarcity of vacant homes available for the younger buyers entering the property market.
This may also prevent house prices from going down to more affordable levels for younger aspiring first home buyers.
On the other hand, if house prices fall, some elderly homeowners will be left with little housing equity that they could use as Family Pledge to assist their adult children with a home purchase.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying your first home or considering making a family pledge loan to give your kids a head start with their home purchase, you can contact us for information about the best options for you when it comes to your mortgage.