The Coalition’s win last month will have a number of important ramifications for everyday Australians looking to buy, rent, invest or borrow. Here we break down the Coalition’s main commitments to affect property and borrowing:
The First Home Loan Deposit Scheme
The government’s new First Home Buyer Deposit Scheme, scheduled to be available from 1 January 2020, will give first home buyers access to a mortgage with just 5 per cent deposit. Eligible first home buyers will be able to borrow 95 per cent of the value of their new home without having to pay Lender Mortgage Insurance, which can cost in the vicinity of $10,000.1 The government will guarantee up to a 20 per cent deposit, effectively becoming guarantor for buyers who may otherwise be priced out of the housing market.2
The scheme aims to help first home buyers make their purchase years earlier, by not having to save as long for a much larger deposit (often up to 20 per cent). Of course, they still have to qualify for their mortgage in the usual way and show they can make the repayments.
To access the scheme, first home buyers will have to be earning less than $125,000 per year (or $200,000 for couples) and there may be regional caps on the value of the home. It will only be available to the first 10,000 eligible applicants nationally.3
Investment in affordable housing nationally 3
- The government has made an array of commitments to improve housing affordability, including:
- $1 billion investment in local infrastructure to facilitate new housing development
- $100 billion investment in transport infrastructure to link affordable housing with school and work options
- Reducing barriers for older Australians to downsize, freeing up larger homes for families
- $4.5 billion per year investment in Commonwealth rent assistance
- $7 billion investment in housing funding and homelessness services
No changes to property tax
The Coalition has stated they will not make any changes to negative gearing or capital gains tax, which is good news for future investors as well as property owners and renters.
The view of some economists was that Labor’s proposal to change property taxes threatened to affect investment returns, increase rents and exert further downwards pressure on property prices. The property market is showing more stability since the Coalition’s victory, as some confidence has returned to the market. A number of experts are predicting property prices could start to rise next year or even earlier.5
SOURCES: 1 https://www.mortgagebusiness.com.au/breaking-news/13425-election-2019-what-to-expect-from-the-new-government, 2 https://www.sbs.com.au/news/the-feed/what-to-look-out-for-in-a-coalition-government-if-you-re-not-a-baby-boomer, 3 https://www.liberal.org.au/latest-news/2019/05/12/helping-australians-buy-their-first-home, 4 https://7news.com.au/lifestyle/real-estate/house-prices-may-pick-up-in-2020-hsbc-c-137196; https://www.businessinsider.com.au/australia-housing-market-price-outlook-rba-apra-macquarie-bank-2019-5