What The Election Result Means For Real Estate
Mr. Albanese now takes over as Prime Minister at a time of concerning inflation, low unemployment and a budget with substantial debt.
Here are the policies related to housing that the Labor government has promised to enact…
Help to Buy Scheme
Anthony Albanese pledged that a Labor government would cut the cost of a mortgage by up to $380,000 for some eligible Australians under its Help to Buy scheme.
It involves the Labor government providing eligible home buyers with an equity contribution of up to 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price for an existing home.
The scheme will only have 10,000 places available annually though.
Buyers will be able to purchase a property that they intend to live in with a deposit of as little as 2 per cent. Participating lenders finance the remainder of the purchase.
Mortgage costs are reduced since the buyers would be taking on smaller loans.
The policy also has caps on the value of the property you can buy, depending on where you live.
In Sydney and regional centres, for example, the total value of your property can’t be greater than $950,000. For the rest of NSW, the price cap is $600,000.
In Melbourne and regional centres the price cap is $850,000 and for the rest of Victoria the cap is $550,000.
During the period of the loan, the home buyer is able to buy an additional stake in the property when they have the means to do so. Before that point, they will not have to pay rent for the portion of the home owned by the government.
The government would recover its equity and its share of the capital gain when the house is sold.
Further details are expected to be released soon, but most housing experts seem to feel the initiative will help help a small number of people, but it’s not big enough to have any material impact on house prices at large.
National Housing Supply and Affordability Council
Following calls from housing advocates across the country, Mr Albanese pledged to establish a National Housing Supply and Affordability Council to address the two, interrelated issues.
The Council will reportedly be composed of experts from the finance, economics, urban development, residential construction, urban planning and social housing sectors.
The Council will work closely with states and territories on setting targets for land supply, in consultation with States and Territories, and play a key role in developing Labor’s National Housing and Homelessness Plan.
Regional First Home Guarantee
Under an expansion of the First Home Guarantee (FHG), the Labor party has promised to help 10,000 regional Australian families a year buy their first home.
The scheme aims to triple the number of places that Australians living in regional areas received last year under the current FHG scheme.
Places will be reserved for Australians who have lived in the region in which they apply from for more than 12 months. It will see approved applicants purchase a home with as little as a 5 per cent deposit, without needing to pay Lenders Mortgage Insurance (LMI).
Price Cap Reviews
Continuing on from the Labor party’s planned expansion of the first home guarantee, the party also promised to conduct six-monthly reviews of the scheme’s price caps in both the capitals and regional areas that determine the maximum price an eligible applicant can pay for their new home.
There is now bipartisan support for retaining negative gearing.
Labor backed down from its earlier proposed changes to negative gearing in July 2021 promising to “maintain existing regimes for negative gearing and capital gains tax” during the party’s tenure in power following the 2022.
Impact On Mortgage Brokers
As well as working on housing, the Labor party has been actively engaged with the mortgage broking community.
The party has confirmed it will no longer be reviewing broker remuneration (as it had originally planned following the royal commission), concluding that the current system, where around two thirds of all borrowers are choosing to get their loans through mortgage brokers, is working well.