Federal Budget 2022-23 Highlights
Property market implications and measures
Property markets across Australia are currently moving through a different part of the cycle now compared to the last Federal Budget handed down in March. Higher interest rates and cost of living pressures have impacted buyer demand and property values. At the same time, increased tenant demand and a lack of properties available for lease have driven rents higher and vacancy rates lower.
The latest 2022/23 Federal Budget contains a range measures which will directly assist and support property markets across the country. Positively, there are a number of measures which look to address supply side challenges, particularly for social and affordable housing. These include the delivery of new homes into the market via a National Housing Accord and changes to assist older Australians looking to downsize.
Supply side measures
One million new homes under a National Housing Accord – A new accord struck between Federal, State and Local governments, institutional investors, superannuation funds and the construction industry will aim to build one million new homes over the 5-years from 2024. As part of this, the budget commits $350 million over 5-years to deliver 10,000 affordable dwellings, at an energy efficiency rating of 7 stars or greater. States and territories will also support up to 10,000 additional affordable homes. Under the Accord, the Government will help fund the gap between market rents and subsidised rents to make affordable housing projects commercially viable.
Increasing affordable housing – The Government will invest $10 billion in the newly created Housing Australia Future Fund, to be managed by the Future Fund Management Agency. The aim is to generate returns to fund the delivery of 30,000 social and affordable homes over 5-years and allocate $330 million for acute housing needs. Initially the returns from the fund will:
- Repair, maintain and improve housing in remote indigenous communities.
- Provide crisis and transitional housing for women and children fleeing domestic and family violence.
- Build more housing and fund specialist services for veterans who are experiencing homelessness.
National Housing Infrastructure Facility – The latest budget also expands the remit of the $1 billion National Housing Infrastructure Facility. Allowing them to allocate up to $575 million to unlock over 5,500 projected new dwellings, accelerate housing supply and seek to attract more institutional capital.
More time to downsize – The budget extends from 12-month to 24 months the exemption of home sale proceeds from pension asset testing. Giving pensioners more time to move into their next home before their pension is affected. The government is also expanding access to downsizer superannuation contributions for people aged 55 to 59.
Downsizer contributions – The Government will allow more people to make downsizer contributions to their superannuation, by reducing the minimum eligibility age from 60 to 55 years of age. The downsizer contribution allows people to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. Both members of a couple can contribute, and contributions do not count towards non-concessional contribution caps.
Demand side measures
Regional First Home Buyer Guarantee – Under this policy, which began on 1st October 2022, 10,000 places are available each financial year to help eligible regional first homebuyers purchase a new or existing homes with a deposit of as little as 5 per cent. This measure will be funded by redirecting funding from the previously announced Regional Home Guarantee.
Help to Buy shared equity scheme – The budget commits $324 million to help establish a shared equity scheme. This scheme will assist 10,000 home buyers each year with eligible home buyers needing a minimum deposit of 2%, with an equity contribution from the Federal Government of up to a maximum of 40% of the purchase price of a new home and up to a maximum of 30% of the purchase price for an existing home.
Defence Home Ownership Assistance Scheme – This policy provides $46.2 million to assist current and former ADF members to purchase their own home.
Housing policy and advice
A new National Housing Supply and Affordability Council – The budget provides for $15.2 million to establish this new body to independently advise on housing policy. Particularly, on how to improve housing supply and affordability. It will also report on housing policy issues and collect data.
National Housing and Homelessness Plan – The budget allocates $13.4 million over 4-years to develop a national strategy to address the challenges facing the housing and homelessness sector. The Plan will set out reforms needed to make it easier to buy or rent a home and assist homeless Australians.