The 2022 Federal Budget and what it means for real estate

5 Apr 2022

The expansion of the First Home Guarantee (formerly the First Home Loan Deposit Scheme) to 35,000 places a year could lead to more buyer demand in Melbourne’s sub-$600,000 market and get tenants into their first home sooner.

The proposal, contained within this year’s federal budget, means that more first home buyers will be able to purchase a home with a deposit as low as 5 per cent without having to pay for lenders mortgage insurance. The scheme, previously capped at 10,000 places, has been oversubscribed in previous years.

Experts predict this could lead to a spike in buyer activity in areas of the market covered by the scheme’s price cap – $600,000 in Melbourne. Data firm CoreLogic estimates that 30.8 per cent of Melbourne’s housing stock qualifies for this threshold.

“Expanding the First Home Loan Deposit Scheme could increase first homebuyer numbers at a time when the housing market outlook is uncertain. Alternatively this could increase demand for more affordable properties, increasing prices in this segment,” CoreLogic head of research, Eliza Owen, said.

Ms Owen said it was important that anyone who accessed the scheme understood that they would pay more interest over the life of their loan.

The announcement comes as new ABS lending data for February found that lending to owner occupied first home buyers saw a monthly decline at -9.7%, down -29% from a year ago.

Industry players welcomed the announcement but said it did little to address the supply concerns in the housing sector.

“Both HomeBuilder, and the expanded Home Guarantee Scheme are welcome demand-side measures, and cannot address the supply-side issues which increase the cost of new homes,” Property Council of Australia chief executive Ken Morrison said.

“The Government’s own forecasts from the National Housing Finance and Investment Corporation (NHFIC) predict that housing supply is set to drop by 35 per cent right at the time population growth would resume, leading to a national deficit of 163,400 homes by 2032.”

The expanded scheme is available to first home buyers on an income of $125,000 per annum for singles and $200,000 for couples.

Consumer spending measures

 Other measures that may have a flow on effect for the Melbourne property market included the halving of the fuel excise for 6 months – an effort to ease cost of living pressures. There’s also a one-off $250 cost of living boost for pensioners and other recipients of Commonwealth payments in addition to an increased tax offset to low and middle income earners for financial year 2021-22.

Population growth predictions

In a good sign for landlords, the federal budget predicted a return to higher immigration levels. The budget papers forecast a return to net overseas migration of 235,000 by 2025.

Despite this, the Treasury’s Centre for Population is still forecasting a continuation of Victoria’s outbound migration trend in the medium terms, predicting the state will lose a net 40,600 residents to other jurisdictions in the three years to July 2023.

Most of those outbound Victorians will be heading to Queensland, according to the Centre. Victoria will experience a net gain of 19,200 people in the three years between 2023 and 2026.


 here was little in terms of infrastructure announcements for Melbourne in the federal budget, other than new funding commitments for the Beveridge Interstate Freight Terminal and the Western Interstate Freight Terminal in Truganina.




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