May's Federal Budget announcement for 2017 saw the upcoming introduction of a number of measures that will affect the Australian housing market. As expected, these measures are largely aimed at addressing the issue of supplying more affordable housing by encouraging an increase in housing stock and moderating affordability pressures.
Here's a brief rundown of the changes outlined in the Federal Budget that could affect you and your property buying or selling plans in the near to long-term future.
First Home Buyers
First home buyers will be able to salary sacrifice into their superannuation fund to help save a deposit on a home. The amount is limited to $15,000 per year, and $30,000 in total per person. Potentially, a couple could save $60,000 for a deposit over two years at a tax rate of 15%.
Downsizers
Many retired seniors hate to sell their family home for emotional reasons, and also due to fearing losing retirement benefits if they move to a smaller property and have a large balance left in cash. A new measure in the Federal Budget is designed to encourage these seniors to downsize and free up more large homes for younger families.
Under the measure, persons 65 and over can make an additional non-concessional contribution into their super fund of up to $300,000 from the proceeds of selling their principal place of residence. They must have owned the property for 10 years or more and both members of a couple can take advantage of this measure, allowing up to $600,000 from the sale to go into superannuation.
If you are 65 or over and have been putting off selling the family home and moving to more suitable housing for your lifestyle, now could be a good time to speak with your local Century 21 real estate agent to get an appraisal on your home.
Affordable housing measures to increase supply
New measures introduced will help provide cheaper and longer-term finance to community housing providers. Investors who choose to invest in these affordable housing developments will enjoy an increased capital gains tax discount. Investors must hold the property for at least 10 years, however, before becoming eligible for the discount.
Property investors
Property investors whose property is negatively geared will no longer be able to claim travel expenses to inspect the property. There are also new limits on the depreciation expenses that can be claimed as tax deductions.
Foreign investors
Effective immediately, developers can sell a maximum of 50 per cent of any new development to foreign buyers, while the remainder must be sold to local buyers. Additionally, foreign investors will be required to pay a $5000 annual levy on properties they fail to occupy or lease out for at least six months within a year. It's hoped that this measure will encourage foreign investors who buy and hold residential properties vacant to instead put them on the rental market.
National Housing Infrastructure Facility
The Federal Budget includes a commitment of around $75 billion to infrastructure projects over the next 10 years designed to make outer-ring suburbs of major cities and new housing areas more accessible and to boost local employment in these areas. The Budget also proposes the establishment of a $1 billion National Housing Infrastructure Facility to provide financial assistance to local governments for infrastructure projects that will support new housing developments.
Taken individually, no single measure outlined in the Federal Budget is likely to have a major impact on the housing market, however taken together, in the long term they will hopefully lead to a steady increase in housing supply and affordability.