Residz Team 3 min read
Australians have long held sacred the dream of home ownership. But record house prices, rising interest rates, and soaring cost of living pressures make home ownership a privilege instead of a ‘human right’ (as this recent protest in Sydney called it). So what does recently sworn-in Prime Minister Anthony Albanese say his new Labor government will do about the plight of homebuyers?
For a start, he won’t tap into superannuation as the outgoing Morrison government promised to do in the weeks leading up to the May 21 election. To help first home buyers enter a real estate market where property prices increased at nearly seven times the pace of wages growth over the past year, the Coalition’s election promise would have allowed raiding of superannuation to top up home deposits. That didn’t secure them a win at the ballot box.
The Labor government instead offers ‘Help to Buy’ as one of its key policies. It specifically targets 10,000 Australians per year who have incomes under $90,000 ($120,000 for couples). As its policy page states, 40 years ago, almost 60% of young Australians on low and modest incomes owned their own home. Now, it is only 28%.
Help to Buy will “cut the cost of buying a home by 40%”, the policy release says. Eligible home buyers must save a 2% deposit, then the Federal Government will chip in up to 40% of the purchase price if it’s a newly-built home, and up to 30% for an existing home. You won’t pay any rent for the government portion, but when the house is sold you’ll pay them back (unless you bought them out earlier).
The policy estimates that for a homebuyer in Sydney, buying at the maximum price cap of $950,000 with 40 per cent equity, monthly mortgage repayments would be over $1,600 cheaper*.
For a homebuyer in regional Queensland, buying at the maximum price cap of $500,000 with 40 per cent equity, monthly mortgage repayments would be over $850 cheaper*.
To be eligible, you:
The policy says homebuyers won’t need Lenders Mortgage Insurance, which could save them $30,000 or more. And, during the loan period the homebuyer can buy a 5% (or more) additional stake in the home when they are able to do so.
Help to Buy is in addition to Labor’s:
For the full Help to Buy policy, click here.
* Source: NAB home loan repayment calculator. This scenario assumes a 25-basis-point increase on the current base variable mortgage rate of 3.45%, monthly principal and interest over 30 years.
Image: New Prime Minister Anthony Albanese with the Governor General His Excellency General the Honourable David Hurley AC DSC (Retd).