How the 2022 budget will affect home buyers and housing affordability

The federal budget for the 2022-2023 financial year was recently announced, find out how the 2022 budget will affect home buyers and housing affordability.

This year’s budget prioritises factors such as the rising cost of living, flood recovery and home ownership.

Property prices are still at record heights in many areas across Australia, purchasing a property can seem like an out of reach dream for many.

First Home Guarantee and First Home Buyers

The government’s Home Guarantee Scheme which includes the First Home Guarantee (previously referred to as the First Home Loan Deposit Scheme), the Family Home Guarantee and a new Regional Home Guarantee have all been given a boost in this year’s budget.

$8.6 million will be spent over 4 years across these three guarantees, starting from the 2022-23 financial year.

The places available under the First Home Guarantee have increased significantly from 10,000 up to 35,000 per year.

This guarantee allows first home buyers to purchase a property with a deposit as low as 5%, with the government ensuring up to 15% of the property’s purchase price.

This guarantee assists buyers to avoid paying Lenders Mortgage Insurance (LMI), which would normally be charged on deposits below 20%.

This guarantee is available on any type of residential property, including:

• An existing house, apartment or townhouse
• A newly built property
• An off the plan property
• A house and land package

Applicants are to have an annual taxable income of up to $125,000 for singles and $200,000 for couples. For more information, visit www.nhfic.com.au

Family Home Guarantee Expanded for Single Parent Families

In last year’s federal budget, the Family Home Guarantee has been expanded with an additional 5,000 places available per year until 2025.

The Family Home Guarantee assists single parents with dependent children purchase a property with a deposit as low as 2%. The federal government can ensure up to 18% of home’s purchase price.

You don’t need to be a first-time buyer to access this guarantee, which means you’re still eligible if you’ve owned a property previously, but you do not currently own one.

To meet the eligibility requirement for the Family Home Guarantee, you need to be a single parent with a minimum of one dependent child and an Australia citizen with an annual taxable income of no more than $125,000.

The types of properties and property price caps eligible for the Family Home guarantee are the same as those for the First Home Guarantee.

Regional Home Guarantee Available for Regional Home Buyers

The pandemic has seen a rise in demand for housing in Australia’s regions, which has pushed up regional housing prices.

The government has reacted by introducing the Regional Home Guarantee in this year’s budget, this assists those wanting to purchase or build a new property in a regional area.

Similar to the First Home Guarantee, the Regional Home Guarantee allows borrowers to purchase a newly built home or build their own with a deposit as low as 5%. The government can then guarantee up to 15% of the property’s purchase price.

This guarantee is available to anyone who hasn’t owned a home in the last 5 years, which means the scheme isn’t limited to first home buyers.

The scheme starts in the 2022-2023 financial year, it will have 10,000 places available per year. It’s available to Australian citizens and permanent residents.

Increase to National Housing Finance and Investment Corporation

A significant issue in Australia is housing affordability, this has especially been a problem during COVID-19 plus the cost of living rising.

For this year’s budget, the government has announced it will contribute $2 billion to the National Housing Finance and Investment Corporation (NHFIC).

This funding increase will raise the liability cap for low-cost loans that the NHFIC supplies to community housing providers. These loans assists community housing providers to offer more affordable and social housing options.

With this boost, 10,000 properties should be supported by the NHFIC.

Funding for National Housing and Homelessness Agreement

The government has proposed $1.64 billion to the National Housing and Homelessness Agreement in 2022-23, in another funding boost targeted at making housing more affordable and preventing homelessness.

The agreement started in 2018 in a bid to improve Australians’ access to affordable, secure housing and prevent homelessness in the country.