Budget encourages young buyers and single parents and rewards retirees

The Australian Federal Government’s May 2021 budget offers positive signs for first-time buyers in the real estate sector.

In terms of a recap and brief overview, the budget makes allowance for an extra 10,000 places to be added to the First Home Loan Deposit Scheme. The scheme enables first-home buyers to purchase a property with a deposit of five per cent.

A small step towards remedying the national rental affordability crisis is supporting single parents in their purchasing pursuits. As such, single parents will require just two per cent for a home deposit, with the incentive of underwriting assurances for mortgage lenders’ insurance. Savings capacity, affordable price point and mortgage repayments are the key objectives.

Buyers of retirement age (which has been reduced from 65 to 60) are also set to benefit. The First Home Super Saver Scheme provides allowance for an increase in super contributions to purchase property — up from $30,000 to $50,000.

Additionally, single retirees can add $300,000 and couples $600,000 to their super from the sale of the family home.

The HomeBuilder scheme has been extended from 12 to 18 months for construction to commence on a new property from its date of purchase. 

In addition, $10 billion has been added to the Federal Government’s 10-year, $100 billion infrastructure plan, with emphasis on regional centres. 

These financial incentives, geared towards reversing COVID-19 uncertainty, further open the windows of opportunity for first-time buyers and investors.

Accent on local investment

The pandemic’s global travel restrictions have created an investment boom in local getaways, motivating investors to move in on holiday hotspots. 

Independent surveys also confirm that young investors display a strong appetite for holiday towns over city suburbs. 

Research commissioned by ING Australia found that almost a third of Gen Zers (maximum age 24) surveyed (32 per cent) considered purchasing an investment property in a holiday location, compared with the inner city (30 per cent) and outer city (37 per cent) suburbs. 

The ING Australia survey found that four in 10 Gen Zers would prefer to invest in a holiday location. Almost a third (31 per cent) indicated a desire to work and rent in the city while owning a holiday investment property. 

Lifestyle aspirations set to continue

ING’s head of home loans, Julie-Anne Bosch, says the aftereffects of the pandemic also dictate an increasing demand for locally accessible holiday spots over busy city hubs. 

“Despite the increase in house prices, it’s clear from these findings that Gen Zers are financially savvy and looking at alternative ways to get on the property ladder,” Ms Bosch says. 

In line with the budget’s incentives for investors, the ING Australia survey also found that investment properties were high on the agenda. More than a third (34 per cent) of those surveyed purchased an investment property in the past two years. 

Investing in property shows no signs of a slowdown. The ING survey lists the top reasons to invest in property as safeguarding their future (40 per cent); low interest rates (37 per cent); and extra income (37 per cent).