With the recent budget announcement still reverberating through the corridors of Parliament house and a hot topic for media speculators and the general public alike, there is an air of optimism that recent announcements will prove popular with those hoping to enter the property market for the first time and those seriously considering downsizing or investing.
Often struggling to balance their own budgets, first home buyers have welcomed the announcement of the First Home Super Saver Scheme. This scheme will enable participants to contribute up to $15,000 per person per year into their superannuation account up to a maximum of $30,000 per person over two years to help them save for a house deposit. The funds which will be taxed at 15% going in is certain to encourage those who perhaps felt the dream of home ownership was somewhat out of reach. And although the funds will be subject to an exit tax as well, it is expected that the benefit will far outweigh this additional taxed amount.
For those young adults or property focused individuals who enjoy the benefits of living at home with their families, it is suggested that this incentive should be easily achieved and when combined with cash savings could see them moving into their own homes much sooner. It may however prove a little more difficult for those on the rental roundabout struggling to pay rent, balance their weekly budget and save for what has always been considered, the great Australian dream.
Combine these eligible contributions with the additional State Government incentives such as first home owner grants, stamp duty concessions and the optional rent to buy land arrangement on some new properties in Canberra and most potential first home buyers would have to feel encouraged by the latest Superannuation savings scheme. It has been announced that this initiative will take effect as of 1st July 2017 and funds plus earnings will be able to be withdrawn as of 1st July 2018.
Housing affordability has been of concern for some time now with no sign of the standard residential market slowing. Supply and demand of residential homes has seen property prices remain buoyant with buyers motivated to pay premium prices to secure a home with a little green space.
The announcement in the 2017 budget that retirees aged over 65 will be able to un-concessionally contribute $300,000 per person ($600,000 per couple), into their superannuation from the sale of their family home, if they have lived in it for more than 10 years. This has been designed to encourage older people to downsize, freeing up equity from within their properties whilst also making larger family homes available to the market where there remains a major shortfall across all markets within Australia for younger family buyers. Generally considered to be a windfall for older Australians rather than the disincentive over recent times.
In the lead up to the budget there has been much debate about negative gearing and capital gains and although there has been little change in this regard, highlighted in the budget, the news that a vacancy tax will be applied to Foreign Investors who leave their properties vacant is certain to encourage these investors to rent them and free up more rental properties to the market.
There will also be changes to foreign ownership with major developments being restricted to 50% foreign owned as opposed to having no limits currently in place for any such development. This endeavor should ensure the local market buyers have an equal opportunity to buy within these developments pleasing many who are keen to secure property within the apartment market.
Plans for the Government to stop foreign and temporary residents claiming a tax exemption for their main residence when disposing of their Australian homes may be seen as a negative move particularly for professionals coming to Australia.
All in all this budget is designed to build confidence and stability within our economy and these measures will go a long way to doing exactly that. First home buyers should take full advantage and develop a short term plan to maximise their savings and break into the market. Older retirees should see benefits in being able to sustain their retirement plans over a longer period utilising their family homes whilst still enjoying a good standard of living. Investors can still take advantage of the market and the Governments intent to build confidence in the economy whilst encouraging equilibrium for renters, buyers, sellers and investors.