With the surge in housing values, Australia’s residential real estate is now worth more than $8 trillion, which is four times the size of the country’s GDP.
According to CoreLogic, this is the first time the values surpassed $8.1 trillion.
This record-high figure comes on the heels of low interest rates, strong buyer demand and various government incentives and schemes to help home buyers.
Elizabeth Owen, CoreLogic’s head of research says, “However, for many Australians looking to get a foot on the property ladder, the continued strength in the market is putting home ownership further out of reach despite record-low mortgage rates. Wages growth simply isn’t keeping pace.“
Buyers priced out
Many home buyers and upsizers are priced out, with prices soaring and reaching record highs in six capital cities.
According to research by Domain, a potential first home buyer would now need to save at least $1,586 extra each week to save up a 20% deposit.
Figure: Domain House Price Report
Many home buyers resort to paying Lenders Mortgage Insurance (LMI) or taking help from their parents to purchase a property.
150,000 new homes to be built in Sydney
The NSW Department of Planning outlined that 150,000 new homes will be built over the next four years.
Unfortunately, over 200 suburbs will not experience any new developments and areas with supply issues, including the North Shore, won’t see any action.
While the push to increase new homes might cool property prices, many experts believe enough is not being done.
How can the 2021/22 budget help home buyers?
In the upcoming 2021/22 budget, the Treasury revealed its plans to expand existing schemes to help Australians buy homes.
Family Home Guarantee
Effective from 1 July 2021, this scheme aims to support single parents with dependent children by helping them buy with a deposit as low as 2% without paying LMI.
The government will guarantee up to 18% of the property price and allow the borrower to buy without paying LMI.
The new Family Home Guarantee is similar to the existing New Home Guarantee.
Applicants must be Australians and have a taxable income of no more than $125,000.
There will be 10,000 spots available for four years.
New Home Guarantee Expansion
The New Home Guarantee scheme will be expanded for a second year, with an additional 10,000 places in 2021-22.
This scheme helps first home buyers either buy or build a newly built home with a deposit as low as 5%, without paying LMI.
First Home Super Saver Scheme (FHSSS)
The government has said it will increase the maximum amount of voluntary contributions from $30,000 to $50,000 for the FHSSS.
The budget will be delivered on 11 May 2021 at 7 pm and will set the path for Australia’s economy in 2021/22.
These announcements for property and lending will see first home buyers and single-parent families targeted, traditionally people who struggle to get onto the property ladder.
Hopefully, this evens the playing field slightly and makes it easier for those borrowers to buy property.
Do you want to know how the budget can help you with your property goals? Our mortgage brokers are here to help. Call us on 1300 889 743 or enquire online today.