How the Budget affects housing affordability

IT’S a major concern for young Australians, but the Government doesn’t seem to care. Housing affordability has been ignored.

IF YOU’RE looking to buy your first home, this is not the Budget for you.

Though housing affordability is frequently cited as a major concern for young Australians and a top financial issue, prospective property owners have apparently been forgotten by the Government.

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The issue was not mentioned once in Treasurer Scott Morrison’s Budget speech, and only deep in the bowels of the Budget papers are a couple of indirect measures for would-be homeowners to be found.

Asked by news.com.au what was in the Budget for first home buyers, Mr Morrison said they could benefit from what was announced in last year.

The main measure for would-be home buyers in the 2017-19 document was the superannuation savings scheme, which allows Aussies to store their savings in their super funds tax free for a house deposit.

The upshot? There’s been no attempt to provide further relief for struggling property seekers.

In fact, of the major Budget measures that will affect those looking to get a foothold in the housing market, most work against them.

Treasurer Scott Morrison thinks first home buyers have been given all the help they need. Picture Kym Smith

While past Budgets have proposed rewarding downsizers to free up larger homes and make way for emerging families, this one actually encourages older Australians to cling onto the family home.

Expanding the pension loan scheme — which allows pensioners to borrow against the value of their home and other assets without selling up — will encourage older homeowners to hang onto their properties. The measure, in which the government is investing $11 million, will allow all older Australians, including self-funded retirees, to boost their fortnightly income stream to 150 per cent of the Age Pension rate using the equity in their homes.

If you wanted to take a more cynical view, allowing pensioners to “boost their retirement income by up to $17,800 for a couple”, as advertised in Mr Morrison’s Budget speech, also serves to eat into the value of the family home and any inheritance that it may eventually provide.

Increasing the number of home care places — an undoubtedly positive measure that will help prevent older Australians from having to “surrender your dignity or your choices”, according to Mr Morrison — could also work against first home buyers by slowing the supply of housing.

The government will be increasing the number of home care places by 14,000 over four years, projecting that by 2021-22, 74,000 high-level places will be available, meaning those people won’t have to move out of their homes and into aged care.

Budget measures designed to help older Australians could hurt younger Aussies trying to break into the property market.

However, it’s not all bad news. There are some measures in the Budget that favour young property seekers.

As part of the government’s promise to reduce housing affordability by “unlocking Commonwealth land”, a few hundred homes will be freed up in Queensland’s Redland City area, where the government is divesting some land owned by the Australian Communications and Media Authority. According to the Budget overview, up to 400 homes will be made available as well as an increased land supply in the metropolitan Brisbane area.

The government will also provide $4.8 million over four years from 2018-19 to the Australian Bureau of Statistics to construct better estimates of the stock of affordable housing.

So if there are affordable homes to be bought, at least we’ll have a better chance at finding them.