With a potential change in the current downsizer scheme, housing affordability could increase in 2022.
The price of housing grew by 1.8% in just a month in April. The median national price of a dwelling rose from $624,997 to $636,23, which is six times higher than the average monthly price movement over the past decade.
A recent report from CoreLogic also shows that the low-income earners can only afford 17.6% of properties. This group includes many first home buyers who are increasingly being priced out of the market. They cannot rely on their income and savings alone to purchase a property anymore.
With the concerns of housing affordability, the 2021/22 government budget is expected to be focused on supporting low-income families and first home buyers.
One of the schemes being implemented as part of the budget is the downsizer scheme. This scheme allows older Australians to add up to $300,000 each into their superannuation fund from the sale of their home. Although the scheme was introduced in 2019, it has hardly been effective. Only 22,000 Australians have applied, compared to 120,000 Australians for the HomeBuilder scheme.
However, with the entry age point reduced to 60 from 65, the size of the potential pool is 76,000 properties over the next five years. This means, every year, there could be 15,000 more properties on the market.
Data shows that most older Australians are likely to stay in large homes to skip the process of selling, paying stamp duty, or because they are worried about affordability. This, in turn, causes stock problems and drives property price increases.
The downsizer scheme gives the Australians an incentive to sell their large family homes to move into smaller properties. If the scheme works, then it will have a significant positive impact on housing affordability.