The federal budget left little hope to first home buyers, the budget allowed for a $300 million increase in funds for social housing, but no policies to help with housing affordability.
The $300 million package will go towards the National Housing Finance and Investment Corporation to help the states build social housing, this includes:
- $30 million is allocated for the construction of 100 social housing dwellings in Greater Hobart.
- $37.5 million will fund remote housing in South Australia.
Social housing is a vital, often neglected part of housing policy and greater supply of public housing will definitely help affordability over time. The last significant federal housing affordability policy was the First Home Super Saver Scheme in 2017.
We have all major parties talking about their potential changes (or lack of changes) to some of the core elements that promote investment in properties such as Capital Gains Tax and Negative Gearing,
Despite all this, there are some bright spots in the latest budget. The government's tax cuts will help borrowers facing mortgage stress. With income growth slow additional cash in people's pockets each week is positive.
Another factor that we must bare mindful of is that the state government has more influence than the federal government in terms of affordability. The state and local governments have more ability to tackle housing affordability than the federal government, with factors such as stamp duty payments, allocation of the first home buyers grant, land release, development charges and town planning all falling outside of the federal government arena.
The federal government is opposed to changes to negative gearing, a controversial benefit for property investors that an incoming Labor Government has promised to phase out. Removing negative gearing could help bring prices down and allow new owner-occupiers to enter the market but the flipside is that it could also hurt investors who rely on the tax benefits.
The budgets spending on social housing is significant. In total, while this may be the case, there were no specific policies or spending announcements related to easing housing affordability or helping Australians save a deposit. Anyone hoping for a federal first home owner grant should probably develop a more realistic set of expectations.