All eyes were on any measure to help curb the housing crisis in Australia and Treasurer Scott Morrison is confident his Government can change the minds of the 87% of Australian non-property owners who are concerned about being able to afford their first or next home. The Turnbull government announced restrictions on foreign property owners and using voluntary contributions to superannuation to save for a house deposit. However, first home buyers are modest winners in this budget.
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The government announced that they will be allowed to salary sacrifice up to $30,000 into their superannuation accounts. The contribution is capped at $15,000 per year and both members of a couple can take advantage of this scheme. Withdrawals will incur a tax at a lower rate. This, Scott Morrison believes will allow them to save for a house faster.
In other measures that may free up housing supply, the government will fine foreign investors who leave their properties empty. Morrison also announced a plan to increase housing supply by removing disincentives to retirees downsizing. Retirees over 65, who wish to downsize will now be able to pour up to $300,000 of proceeds of the sale of their old home into their super fund., rather than offering incentives that compel them to.
Also, there are no changes made in regards to negative gearing or the highly contentious stamp duty tax on property.
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No, it was speculated that the Federal Budget 2017 might allow first-home buyers to dip into their superannuation to fund a house deposit, however this is not an option going forward.
Prior to the budget announcement, Treasurer Morrison dispelled the rumours surrounding super and told the ABC “if you are concerned about housing affordability, which is caused by demand exceeding supply, you don't want to pursue measures that boost demand. You want to pursue measures that boost supply and, if anything, help moderate demand, and that is obviously not something that is on the tale with this particular proposal.”
That said, many have questioned why it is okay for superannuation funds to invest in real estate, but not for young superannuants.
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This measure allows first-home buyers to use their pre-tax income to help pay for a home deposit. Greens senator Sarah Hanson-Young told ABC, however, “just putting money into the bidding process isn’t necessarily going to reduce the cost of housing.”
Still, the Turnbull government has given salary sacrificing its tick of approval. Morrison hopes that it will reduce the time it takes to save for a deposit, putting buying power back into the hands of families and not necessarily property investors.
Data courtesy of CoreLogic.
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