THE Rudd Government has set aside $2.2 billion over the next four years to tackle the housing affordability crisis.
Of the $2.2 billion, $1.17 billion has been allocated to fund the establishment of First Home Saver Accounts.
Another $622 million for the National Rental Affordability Scheme, which the Government said will create up to 50,000 new rental properties, and $359 million for the Housing Affordability Fund.
Treasurer Wayne Swan said in his speech, the $2.2 billion package will help working families who are struggling with the housing affordability crisis.
“We will introduce enhanced First Home Saver Accounts. The first $5,000 of individual contributions will now attract a Government contribution of 17%, earnings will be taxed at a low rate of 15%, and withdrawals will be tax-free if used to buy or build a first home. The Government will provide assistance of $1.2 billion over four years through the Accounts.
“To improve housing supply, and lower prices for homebuyers, the Housing Affordability Fund, worth $500 million over five years, will help reduce the cost of providing new housing infrastructure and cut red-tape in development approvals.
“And to reduce rental costs, the National Rental Affordability Scheme will encourage the construction of up to 50,000 new affordable rental properties by 2011-12, at a cost of $623 million over four years,” Swan said.
But Laing+Simmons’ general manager Leanne Pilkington said the first Federal Budget is a mixed bag that offers some promise for the troubled property market.
Pilkington said it is time
According to Pilkington, stamp duty represents the major hurdle in overcoming the current housing crisis.
“Stamp duty was supposed to be phased out after the introduction of the GST, but squabbling between different levels of government has seen it continue to plague the property market.
“Until stamp duty is abolished we will not see a flurry of investors returning to the market. This tax remains a critical barrier as more and more people are choosing shares over property as their preferred investment option,” she continued. “This ensures that housing supply remains in shortage while the rental squeeze continues to bite. The abolition of stamp duty can not come soon enough.
“The Government was adamant that it would be a tough budget aimed at encouraging sustainable growth and tackling inflation. Any measures that put sufficient downward pressure on inflation so that an easing in interest rates unfolds will be welcome news for the property market as a whole.
“But it will take some time for the market to experience any significant upturn and some aspects of the budget could have a negligible or even negative effect… Families are undoubtedly doing it tough, and in the case of many families any extra income will end up going towards mortgage repayments,” Pilkington said.
Australian Property Journal
