Now that the election has been resolved (give or take a seat or two), it’s time to take a closer look at Labor’s key housing policies.HELP TO BUY
Labor’s most talked about policy pre-election was their Help to Buy scheme. Modelled on similar programs already operating in Western Australia and Victoria, the plan is aimed at assisting an additional 10,000 home buyers a year.
The scheme won’t be restricted to first home buyers, instead it will be available to anyone who doesn’t currently own any other land or property in Australia or overseas. The buyer will need to pay associated purchase costs such as stamp duty, legal and bank fees and ongoing property costs such as rates and strata fees, but won’t require mortgage insurance.
To qualify, buyers must intend to live in the property, earn $90,000 or less gross annual income per annum as an individual (or less than $120,000 for couples), have saved at least two per cent deposit and be able to finance the remainder of the purchase through a home loan.
The shared-equity scheme will see the Federal Government contribute up to 40 per cent of the purchase price of a new home and up to 30 per cent for an existing home. This percentage could be bought back by the owner over time (or they could opt to leave the shared ownership structure in place), but initially means a smaller deposit, a smaller mortgage and smaller repayments for the new buyer.
Ultimately, the program is planned to deliver income for the commonwealth over time, as the government recovers equity and their share of the capital gain upon sale of the property - a strong vote of confidence in Australia’s long-term housing market.FIRST HOME BUYER SUPPORT
In addition, from January 2023 the Albanese Labor Government will also help 10,000 first home buyers a year in regional Australia to purchase a home. Eligible buyers, who need to have been living in the regional area for at least twelve months, will be able to secure a home with a deposit as low as five per cent - the government will guarantee up to 15 per cent of the purchase price. Encouragingly for the building industry, house and land packages, off-the-plan apartments and land with a contract to build will all be part of the scheme, along with existing houses, townhouses and units.HOUSING AUSTRALIA FUTURE FUND
In another win for the building industry, Labor also plans to create a $10 billion Housing Australia Future Fund to build 30,000 new social and affordable housing properties in the next five years, including:
20,000 social housing properties10,000 affordable homes for frontline workers
In addition to the above, a portion of the investment returns will be available to fund acute housing needs on an ongoing basis.MANAGING SUPPLY AND DEMAND
Labor’s Help to Buy policy is aimed firmly at low and middle income earners. So regardless of whether you voted red or blue (or green or teal), the good news for investors is that the existing Home Guarantee Scheme will continue, with some additional impetus from Help to Buy. This means assisting even more buyers into their own homes in an increasingly expensive environment…helping to support demand-side stimulus.
Even if we throw the Green’s proposal to build one million new homes (or portion thereof) across Australia into the mix, we’re still facing the same challenge of trying to successfully balance supply and demand issues in the Australian housing market.
And all of this is why the smart money is still out there purchasing property. So if you’re interested in learning how to build long term wealth through Australian property, book in a discovery call with one of our mentors today.
