The Australian housing market has been a political issue for many years now. Affordability has declined throughout the entire country and it is no longer just young families that are struggling. First time buyers and even well paid professionals are all having the same problem: suitable properties are practically unaffordable and hard to find.
In addition to this, the rental market has increased hugely as well. This means that the increasing number of Australians who have to rent homes do so at ever increasing prices. For many of these people this means the dream of home ownership is quite a distant dream.
Being able to afford a home that you can call your own makes a huge difference to your life. Especially for families, it provides a sense of protection and security. With everything else that life might bring, at least you have somewhere safe to stay.
As of May 2017, the Australian Federal Government has announced some changes to the budget. Many of the measures will be taking almost immediate effect. But what do they mean for the different types of home buyers? To help you understand we have put together this guide.
First Home Buyer Market
One of the biggest problems for a first home buyer is coming up with a deposit. As prices have risen, the size of the deposit has gone up as well. And because house prices have risen so fast, many people have not been able to keep up.
You might find yourself in a situation, where your income has stayed pretty much flat for the past 10 years. And while you might be saving as much as you can, increases in other living costs have been eating into that ability.
To help first time buyers to save up for a deposit quicker, Treasurer Scott Morrison announced a measure called The First Home Super Savers Scheme. Essentially, this will allow you to contribute some of your salary to a superannuation. This has significant tax advantages, so you will be able to save more of your income.
Usually, your super contributions are locked away until you retire. But with this saver scheme, you will be able to contribute up to $15,000 per year that can be withdrawn to fund a house deposit. There is a cap of $30,000 on this, but this could work out to be a good way to save up faster.
The scheme will be active from 1 July 2017 and the earliest you will be able to withdraw the funds is 1 July 2018. Now, you might be wondering how you figure out what deposit you will need. And that is where we can help out.
As one of the leading Sydney buyers agent we can help you better understand what price ranges you need to look at and what that means for a deposit. Contact us today to take the first step towards getting into your own home.
Australian Seniors & Downsizers
With the way house prices have gone, many seniors now find themselves in a situation where they have a very valuable asset: their home. In many cases this home is too big. But selling and finding a smaller property is not as easy as it used to be.
One of the leading reasons for this is that smaller homes have drastically gone up in price as well. So, there is not as much of a financial benefit anymore.
To encourage the over 65 year olds to become downsizers, the government has introduced options that will help them take that step. If you are over 65 you will be able to make a post-tax contribution to your superannuation from the proceeds of selling your home.
There are a couple of rules attached. First of all, you have to be selling your main residence that you have owned for more than 10 years. Secondly, there is a cap of $300,000 per person. So, for a couple where both are over 65, the total contribution that can be made is $600,000.
The idea behind this measure is to get older generations to sell their large family homes and move into smaller ones. This would then increase the supply of such homes, giving families more options and hopefully more affordable prices.
Family Market Affordability
If more downsizers can be encouraged, then this should have a positive impact on the affordability of family homes. It is unlikely that it will cause significant drops in prices. But it should help to put on the brakes.
This would at least give families the opportunity to set achievable goals. Nothing is more frustrating than working hard towards a goal, only to see the goal line constantly moving further away.
Partnering with a Sydney buyers agent is one of the best options you have. We can help you through the process of finding suitable areas and properties as well as help you figure out your budget.
To reduce the demand from foreign investors the government is introducing several new restrictions. First of all, there will be a property tax of $5,000 imposed on foreigners who leave their properties unoccupied for more than 6 months of the year.
This is to stop homes being unoccupied for long periods, at a time when even the rental market is struggling to keep up.
For new developments being constructed, there will also be a 50% restriction to foreign buyers. Essentially, developers will not be able to sell more than half of new builds to non-residents.
Finally, upon selling a property, foreign property owners will have 12.5% capital gains tax withheld (up from 10%). On top of this the threshold for capital gains will be reduced from $2 million to $750,000.
All these measures will have some impact on the market. The question still is whether this will be enough. Or whether it will be just a drop in the ocean. If you are struggling to get on the property ladder or need advice on downsizing or upsizing, then working with an agent is the best option.
As a buyers agent Sydney is the area we specialise in. If you need help with any part of the buying process then contact us today on 0425 221 226.