|Three major housing-related measures were highlighted in Treasurer Frydenberg's budget address on the 6th of October: an extension of the First Home Loan Deposit Scheme (FHLDS), additional low-cost financing for affordable housing through NHFIC, and additional funding for the Indigenous Home Ownership Program.
Other measures detailed in the budget papers included a proposed capital gains exemption for granny flats for eligible persons from July next year, and a continuation of funding for state social housing services.
The papers also note that the expansion of the first home loan deposit scheme will be complemented by announced changes to ease credit regulations, which would boost credit availability.
Funnelling new demand into new property
First home owners have previously been a target of demand-side housing stimulus during economic downturns. Currently, Australia may be in a demographic 'sweet spot' for first home buyer demand. The relatively large millennial generation is now estimated to be aged around 26 to 37 years old. According to ABS data, this puts millennials into the most common first home buyer age groups. Alongside the typical barriers to entry for hopeful first home buyers, this may be one of the reasons the first home loan deposit scheme has been so well-subscribed since its introduction in January this year.
The extension to the FHLDS will see an additional 10,000 places available between the 6th of October and the 30th of June 2021, adding to the 20,000 places made available since the scheme started in January 2020.
However, these additional places are for construction or purchase of newly-built homes. The price thresholds have also been increased for newly built homes, which would potentially further incentivise a pivot away from the established housing market. The change in purchasing thresholds by region are summarised below.