There were a few specific items relating to the apartment market or property generally in yesterday’s Federal Budget, but they were mostly tweaks to existing measures. Here is a quick overview.
The Family Home Guarantee was extended and widened to enable 10,000 single parents to build a home or purchase select existing properties with a deposit as low as 2%. The intention of helping this sector into the property market is to be supported but it will be important to get the detail right.
Firstly it feels risky leveraging a property to 98%, not only from a repayment perspective but also the capital exposure assuming there is no protection against the market downside or interest rate changes, especially when you include transaction costs of a future sale.
Secondly first home buyers by definition have never purchased a property before so who is advising them on all the complexities of buying a property if they can not afford to engage a professional adviser? The Federal Government is however going to continue to underwrite lenders’ mortgage insurance for this sector.
The First Home Super Saver Scheme which was first introduced in 2017 was increased to allow first home buyers to access $50,000 (up from $30,000) of voluntary contributions in their super fund to purchase a property.
The Downsizer Super Contribution age limit, which allows $300,000 per person ($600,000 per couple) in proceeds from the sale of the family home to be put into their super fund, has been lowered from 65 to 60. The hope is this frees up the availability of homes for growing families.
Other measures such as infrastructure spending and initiatives to improve general economic activity will all be beneficial to the broader property market.
However the topic that I was most interested in was the likely timing of opening up the boarders for international travel as this will have the biggest impact on the apartment capital and rental markets. Their estimate is mid 2022 and hopefully it starts improving between now and then.