Where first home buyers stand now – all the help and hits – Bendigo Advertiser

In one of those worst-kept budget secrets, the government threw almost everything at the housing affordability crisis on Tuesday night. And it might just work. Not least because it feels like house price growth in some areas is already slowing.

The headline news from the budget is the proposed new First Home Super Saver Scheme. Laudably resisting the temptation to allow people to raid their actual super for a home, this scheme would instead let them save explicitly into it for property – with similar tax perks.

So aspiring property owners would pay not their marginal rate but just the 15 per cent super contribution tax. They would be able to save $30,000 or $15,000 a year – each – so a couple can amass double (note this is subject to the overall annual concessional contributions limit, which includes the 9.5 per cent employers pay, of $25,000 a year).

This money will grow at the 90-day bank bill rate plus 3 per cent, which is a nice boost on what you can get in a traditional savings account. On withdrawal, this money will be taxed at the relevant marginal rate minus 30 per cent. You can calculate to how much greater your deposit can grow here.

The Super Saver is a nice demand-side mechanism that, unlike grants and giveaways, should not directly inflate prices. It’s also a better, more familiar proposition that Labor’s previous and unpopular former First Home Saver Accounts.

But there’s no point, literally, super-charging Australians’ deposits if they remain a futile chase for rampaging prices.

So it’s with some relief to investors, often blamed for the rises, that largely they have been spared from a crackdown. Negative gearing stays with some small tweaks (you can forget the “inspection” trip to the Gold Coast and kiss goodbye to some depreciation items unless you actually bought them). Capital gains tax (CGT) concessions too are safe.

But it’s a different story for overseas investors, where there’s a deliberate campaign to cull.

?? The main residence exemption from CGT will disappear entirely for non- or temporary residents – effective immediately (although they can claim the exemption on existing properties until June 30, 2019).

?? Foreign ownership in new developments will be restricted to 50 per cent.

To boost the availability of rental accommodation, future foreign owners will also incur a $5000 “ghost tax” if they leave a property vacant for six or more months in a year. Meanwhile, local investors who offer cheaper rents to tenants on low to moderate incomes could qualify for extra CGT concessions, from 50 to 60 per cent (a registered community housing provider must manage the property for at least three years).

How to get more housing stock for sale though, the big issue for house prices? Australians 65 and over are going to be encouraged to downsize by the ability to shelter $300,000 – again, each person in a couple – within tax advantaged super (but note this would be fully assessed for pension purposes). There’s talk this could release 50,000 homes onto the market.

The government is also releasing surplus defence land on the outskirts of Melbourne, for 6000 new homes, and Commonwealth land in Western Sydney.

Of course, this is all on top of the concerted regulatory crackdown on investors and on interest-only loans to owner occupiers. The average amount lent for property, across investors and owner occupiers, began ticking down two months ago and now stands at levels of a year ago: $353,700.

It’s early days and there’s a lot of talk the government has not gone far enough to fix housing affordability. But containing property prices is a delicate issue. Two out of three voters already own one.

Nicole Pedersen-McKinnon is a commentator and educator who presents her Smart Money Start, fun financial literacy incursion, in high schools around Australia. Follow Nicole on Facebook.

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The story Where first home buyers stand now – all the help and hits first appeared on The Sydney Morning Herald.