Victorians to get up to $40,000 boost in homebuying power from July 1, 2024, stage three tax cuts

As banks and lenders factor in federal government tax breaks from July 1, the state’s average income earners could get an at least $20,000 boost. Find out how much more you could borrow.

This two-bedroom unit at 4/9 Billson St, Brighton East, is listed for $850,000-$900,000 and is priced within the purchasing power of a couple who earn around $193,000 a year collectively.

Victorians are set to get a $20,000-plus boost to their homebuying budget next month in the first improvement to housing affordability since November 2020.
Banks and lenders around the country are factoring in federal government tax breaks from July 1, giving the average $96,621 single income earner a $20,000 boost to homes they could afford.

For families and couples on $193,243 there is a $40,000 increase in purchasing power on its way.

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But despite a boost, a single average wage would only give buyers enough purchasing power for a $475,000 home.

Separate PropTrack figures show this would cover a median-priced unit in 36 Melbourne suburbs, but would fall just short of the city’s most affordable suburb for housing – Melton, where a typical house costs $477,000.

However, to avoid falling into mortgage stress, when homebuyers pay more than 30 per cent of their income on their loan commitments, their maximum purchasing power would be lower.

This two bedroom apartment at 112/7 Dudley St, Caulfield East, is listed for $280,000-$308,000.

This apartment could be affordable for single Victorian earning the state’s average income.

Canstar group executive Stephen Mickenbecker said while it was possible for singles to get a foothold in the market, they didn’t have much borrowing power.

“You’re really going to be limited to outer suburbs and home units if you’re single, so you might want to do something a bit more creative like the government shared equity scheme,” Mr Mickenbecker said.

“If you look at couples with both on average incomes, now they can afford to spend over $1m on housing; That’s enough to get into a house.”

But Australian Property Home Loans director Adele Andrews said many lender’s were already factoring in changes to the borrowing capacities of prospective buyers.

Ms Andrews said banks were acknowledging many first-time purchasers were finding it impossible to save a 20 per cent deposit, and that she had recently helped a couple buy a home with a just 3 per cent deposit.

“If they’ve got the savings and they’ve got the cash and they’ve got the earning capability, I would not encourage anyone to wait at the moment; the market will always catch you out,” she said.

This two-bedroom apartment at 31/1 St David St, Fitzroy, is listed for $695,000.

A couple where one person is earning the state’s average income and the other is earning half of that could afford this unit.

While it was true that a buyer putting down a 20 per cent deposit would be offer better rates, she said many lenders were “coming to the party” with more competitive rates for the higher loan to value ratios (LVRs).

Ms Andrews added that the amount of equity that could be lost by waiting for home prices to come down wasn’t worth it.

“As soon as there’s a bit more confidence out there or there’s any talk about rates coming down and more people start entering the market, all that’s going to drive prices up — and

that could all be the lost opportunity for people,” she said.

Buyer’s agent Emily Wallace said because borrowing power was increasing for all vying buyers at the same time, everyone who had more would spend more.

“Everyone’s got access to the same availability,” Ms Wallace said.

“One thing I will note about the new financial year is that a lot of investors are holding off selling their properties until after July 1, when the tax (change) occurs.

“Investors need to be strategic with tax planning, therefore it may advantageous to wait for the new financial year as their capital gain from a sale can impact how much tax they pay.

“I do think we’ll get more stock post July 1.”

This two-bedroom house at 12 Forest St, Collingwood, is listed at $950,000-$1.03m.

This house could be affordable for a couple where both people earn Victoria’s average wage.

While she said the market remained “disheartening” for many buyer’s trying to get a foothold, it was important that they understood their options to increase their borrowing capacity on top of these boosts.

“So guarantor loans, any government schemes, and understanding through a mortgage broker, what lenders you can be eligible for based on your occupation, waivers for LMI (lender’s mortgage insurance) and things like that,” she said.

“Ask: how can you leverage what’s available to you to get into the market with a reasonable budget?”

SINGLE PERSON ON VICTORIAN AVERAGE INCOME:

The average single income earner will be $20,000 better off from July 1 and able to afford homes worth up to $475,000, without going into mortgage stress.

That would cover a typical unit in 36 suburbs across Melbourne, but they’d have to look for a sub-median home in Melton or beyond the city limits for a house.

A single income earner could find a unit under their purchasing power in areas like Caulfield East and Travancore where the median unit values are $330,000 and $352,000, respectively.

Skipton on the outskirts of Ballarat could suit some buyers able to relocate to a near neighbour of the state capital, with a median house price at $319,000.

Those able to relocate further afield could also consider the state’s North West, where a typical house in Sea Lake costs $165,000.

COUPLE, ONE EARNING AVERAGE INCOME, ONE EARNING HALF

A typical couple where one person earns the average Victorian income of $96,621 and the other takes home around half that amount will have joint purchasing power of $770,000 if they can put down a 20 per cent deposit in the new financial year.

This means they’ll have access to units in close to 80 per cent of Melbourne’s suburbs, including Fitzroy and Richmond in inner Melbourne where the median unit values are $755,000 and $595,000, respectively.

While there’s less choice for a couple looking for a house under this price limit, there are still 105 suburbs where they could afford a standard house, such as in Albion and Yarra Junction. Moving away from Greater Melbourne, the pair could look at more affluent regional areas from Cape Woolamai in the Gippsland region to Hepburn near Ballarat.

COUPLE WHERE BOTH EARN THE AVERAGE INCOME

A Victorian couple where each person is taking home the average state income of $96,621 could buy in more than half of Melbourne’s suburbs with their $1.055m buying capacity — providing they put down a 20 per cent deposit.

But from July 1 a $40,000 boost is on its way.

Close to their budget, the pair could afford to buy in sought-after Collingwood and Chelsea where typical houses cost $1.057m and $1.09m, respectively.

For units, there are just seven Melbourne suburbs they couldn’t afford.

But within their reach are affluent neighbourhoods such as Brighton East and Deepdene, where the median values are $1.0259m and $1.0875m, respectively.

Outside Greater Melbourne, the pair could buy a sea-change in Apollo Bay for around $1.06m or a tree-change in Daylesford for $890,000.

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Originally published as Victorians to get up to $40,000 boost in homebuying power from July 1, 2024, stage three tax cuts