First homeowners to get taxpayer-funded help to ‘accelerate’ saving for deposit

THE Government will give a break to would-be first homeowners struggling to save for a deposit by giving them taxpayer-funded help in the Budget to “accelerate” their savings.

Reserve Bank Governor Philip Lowe addressing an Economic Society of Australia business lunch. Picture: AAP

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FIRST home buyers will receive taxpayer-funded help in the Budget to “accelerate” savings for a deposit.

Assistant Minister to the Treasurer, Michael Sukkar, has revealed the Government will give a break to would-be first homeowners, who are already struggling with the cost of high rents, let alone saving for a deposit.

“The main issues for first home buyers is to get that deposit together,’’ Mr Sukkar told Sky News yesterday.

“But by the time you’ve saved for that amount the market has moved.”

He said the Government would help “accelerate” the savings of first home buyers who were trying to put “that deposit together”.

While he would not reveal how the Government would facilitate the housing help, it was likely it would be a tax break of some form.

The offer comes as the Reserve Bank of Australia boss laid the foundation for the Government’s intervention in the nation’s housing affordability crunch.

Just four days out from the Budget – and amid ongoing speculation that the Government has dramatically watered down its planned intervention for the housing market – RBA Governor Philip Lowe yesterday outlined the national consequences of skyrocketing housing costs.

“The levels of debt and housing prices also affect the resilience of our economy to future shocks,’’ Dr Lowe told Queensland’s branch of the Economic Society during a meeting in Brisbane.

“Beyond these economic effects, high levels of debt and housing prices have broader effects on the communities in which we live.

“The high cost of housing is a real issue for many Australians and can have serious side-effects.

“High levels of debt and high housing costs can also reinforce the existing distribution of wealth in our society, making social and geographic mobility more difficult.”

He shot down well-placed leaks that the Government was considering allowing aspiring homeowners to use their superannuation to save for a home deposit.

“You address it by adding to supply – it’s the supply of dwellings and the supply of well-located land,” he said.

“That’s where the focus needs to be. Policies that increased demand would be just capitalised into the price.”

Treasurer Scott Morrison is likely to use a number of levers to try to level out the housing market.

These could include selling off Commonwealth land, building new critical infrastructure near vacant land, a downsizing plan for seniors, a new tax on foreign investors who keep homes vacant and a new low-cost housing aggregator to help encourage investors to invest in affordable housing.