What the Federal Budget means for property sellers, buyers and investors

13 May 2021

Victorians planning to sell their homes and homebuyers are the big winners of Josh Frydenberg’s Federal Budget, with some positive signs for investors.

The 2021 Budget, unveiled on Tuesday night, has been widely received as a positive one for the real estate industry at large. 

According to Mr Frydenberg’s Budget Speech: new house starts are now the highest in 20 years and new first homebuyer loans reached their highest level in nearly 12 years.

While the pace of price growth is slowing, the Morrison Government expects the national real estate market to remain buoyant with the dearth of supply set to ease.

“HomeBuilder has been a huge success,” Mr Frydenberg said.

“And our $2 billion investment in affordable housing is bringing on more supply. In this Budget, our housing measures go even further.

“Under the Coalition, homeownership will always be supported.”

Below, we have outlined the key housing and real estate features of this year’s Budget, the second during the COVID pandemic.


First home loan scheme and HomeBuilder extended

The First Home Loan Deposit Scheme and HomeBuilder exceeded the Coalition Government’s expectations and have significantly helped the housing recovery.

In a bid to continue the real estate recovery and to help more first homebuyers onto the property ladder, both schemes have been extended.

Under the FHLDS New Home Guarantee, 10,000 more places will be available from July 1. This allows first homeowners to buy or build a new home with as little as five per cent deposit, the remainder of which is guaranteed by the government. 

It is not a cash payment or deposit for your home loan but a guarantee on the loan. It can be used with other government incentives such as First Home Owner Grants, stamp duty exemptions or concessions, the First Home Super Saver Scheme and HomeBuilder.

But it is capped at 10,000 places and has been very popular so if you are considering applying you should do so as soon as possible.

Meanwhile, the construction commencement period for existing applicants of HomeBuilder has been extended by 12 months.

CoreLogic’s Head of Research Eliza Owen said these schemes are part of the government’s overall policy to increase homeownership without pushing down values.

“The federal government has utilised a different approach to boosting the rate of homeownership,” she said.

“They focus on increasing accessibility of mortgages, rather than risking any downward pressure on residential property prices.”


Single parent boost – Family Home Guarantee

The Family Home Guarantee is a new scheme aimed at helping single parent families own a home.

There are 10,000 places available over the next four years from July 1 for eligible single parents with dependents to purchase a new or existing home with a deposit of as little as two per cent.

This measure is part of the Budget’s focus on women: as many as 105,000 of the 125,000 single parent families that will likely be eligible are headed up by mothers.


Use more superannuation to buy your home

The Budget has also introduced an amendment to the First Home Super Save Scheme, that allows first home buyers to release $50,000 of their superannuation to buy a home. That has been increased by $30,000.


Boost for downsizers, increase housing supply

Downsizers also received a boost in the Budget.

People over the age of 60 (down from 65), will now be able to pay $300,000 into their super from the sale of their homes. A concession the government hopes will free up more homes.

“We will allow those aged over 60 to contribute up to $300,000 into their superannuation if they downsize their home, freeing up more housing stock for younger families,’’ Mr Frydenberg said.

Couples can contribute a combined $600,000.

To be eligible you must have owned the home for more than 10 years.


Good signs for investors

In the Budget Strategy and Outlook, the government described the current real estate market as ‘robust’, another positive sign for investors.

“Dwelling investment has continued to strengthen amid robust housing market fundamentals, including record low interest rates and stimulatory housing policy incentives from Commonwealth, state and territory governments — including the HomeBuilder program,” the Budget Strategy and Outlook read.

“The housing market rebounded in the second half of 2020 and this has continued into early 2021 with sustained strength in building approvals and owner-occupier lending, including to first home buyers.

“Housing prices have risen significantly in early 2021 and these have been broad-based across the country, with regional growth outpacing rises in capital cities.”

However, the government expects that growth to slow.

“The near-term outlook for housing activity has strengthened considerably, supported by an elevated pipeline of construction work and rising house prices,” the Budget Strategy and Outlook continued.

“However, the policy-driven strength in demand for detached house construction partly reflects a bring-forward in demand from future years and activity is expected to moderate as the current pipeline of work is completed.

“As the outlook for elevated levels of detached house construction unwinds, slower population growth is also expected to limit demand for higher-density dwellings in coming years, such that the recent strength in housing market activity is not expected to be sustained.”

Such sentiments should also give those who have invested in property confidence moving forward.

If you are an investor, seller or buyer and would like help from our team, please contact us today.



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