According to the Australian Government:
“Regarding the federal budget, we always see housing affordability on the agenda; this year is no exception. We in the business are thinking about what this means for the Perth real-estate market as the recently released Federal Budget is already making news and Treasurer Josh Frydenberg is trying to convince regular Australians of the advantages of this year’s budget. The Home Guarantee Scheme will cost the government $8.6 million over the following four years and provide up to 50,000 seats annually for three years”.
The biggest real-estate report of the year is the government’s decision to expand the FHLDS First Home Buyer Government Guarantee, which allowed 10,000 home buyers to purchase a property with a 5% down payment and avoid paying lender’s mortgage insurance. Despite being a tremendous effort, this government-backed financing alternative has long struggled to help more Australians afford homes. However, with this year’s Federal Budget, the government increased the number of positions covered by the FHLDS from 10,000 to 35,000.
The programmes will drastically reduce the time required to save a deposit. To be eligible for the programme, a person must earn no more than $125,000 for a single application and $200,000 for a couple. Additionally, only candidates who intend to utilise the home as their residence rather than an investment are eligible for the programme.
Building a stronger future for the nation
The budget’s primary objective varies yearly due to changing circumstances. The budget for 2022, however, is comparable in this regard. The main focus of last year’s budget was ‘securing Australia’s recovery, but in 2022, the focus has gravitated toward building a stronger future for the nation. With this in mind, Treasurer Josh Frydenberg presented the 2022 budget in March.
The government has labelled this budget the next stage in guiding Australia’s robust economy into the future. The aspects that top the list of priorities in the budget are:
- Flood Recovery;
- Cost of Living; and
There is no surprise that daycare, cash handouts and fuel excise duty are all receiving attention, given how rapidly living expenses are rising. Additionally, homeownership will be a major focus of the 2022 budget as the cost of home ownership is expected to increase by 30%.
So take the plunge and make your way through every part of the 2022 budget that will impact your home purchase. In this article, we have outlined all the measures taken by the government that could help an aspiring home buyer to navigate the real-state landscape better.
Good News: No Nasties for Property Investors
(Intrinsically, this year’s budget did not impact negative gearing or the tax breaks for capital gains. Any changes to taxation or land ownership would almost certainly spark a political earthquake, which is the last thing any politician wants.)
First, it is crucial to comprehend negative gearing and capital gains tax incentives because they are both addressed in this section of the 2022 budget.
- Negative Gearing occurs when a person obtains a mortgage to purchase an asset, followed by a loss because the investment’s revenue does not exceed its expenses. The resulting loss is utilised to reduce the overall taxable income. Negative gearing does not only relate to real-estate investments. Negatively geared individuals may offset their loss against other sources of income, such as salaries and earnings. This is consistent with how Australia’s income tax system generally functions.
- Capital Gains Tax Concession represents the non-assessable portion of the “capital gain tax discount component” distributed to investors through unlisted managed funds or publicly traded trusts. One of the best elements of this budget is that it won’t affect negative gearing or capital gains tax breaks. Any changes to property ownership or taxes have the potential to upend the political system, which is something that no political party wants to happen.
- Various Reliefs
The temporary relief provided for all suburban families is the one aspect of the 2022 budget’s impact on housing that cannot be disregarded. The reduction in fuel excise by 22 cents per litre was at the top of the list of reliefs, which was lengthy.
Another addition to the Low and Middle Income Tax Offset is the one-off $420. This will result in more than 10 million people filing a claim for $1,500 in July. This is the right step taken by the government when considering consumer demand but might lead to a spike in inflation. The gravitation of the scales towards the tip of inflation is a major concern for the Reserve Bank of Australia; therefore, they expect to take some major steps towards it.
- Record Investment in Health: Under the Australian Government, funding for the health system has increased yearly and is now at an all-time high. More than 2,800 new or modified PBS listings have received government approval or roughly one daily. Trodelvy is a rare kind of breast cancer, and the government intends to save sufferers up to $80,000 per course of treatment. This medication provides many young women hope for the first time, extending their life expectancy and giving them the chance to spend priceless time with their loved ones. Additionally, the government keeps making investments to protect Australians against the pandemic. With immunisations, testing and treatment and more PPE, the nation’s stockpile will be increased before winter.
- Support for Mental Health and Preventing Suicide: Patients and their families may experience total disability due to mental illness. Last year’s budget included a historic $2.3 billion investment in mental health and suicide prevention, expanding Headspace’s programmes and funding community-based treatment centres and online mental health resources. Hence, this year, the administration’s primary priority is providing support for mental illness and preventing suicide.
- Women’s Economic, Physical and Social Well-being: In Australia, domestic violence affects one in four women, and unfortunately, every 11 days, a woman dies at the hands of her current or former partner. The government has proposed a new $1.3 billion plan in budget 2022 to end violence against women and children. More frontline services, emergency housing, and help for women and kids to obtain legal and medical assistance will be available when they require them. Additionally, a sizable new women’s health package is included in this budget.
- Enhancing and Improving the Life of People with Disabilities: The NDIS has significantly improved the lives of 500,000 Australians and their families. Each year, this budget includes more money for the NDIS. The Coalition will always provide full funding for the NDIS.
- Taking Care of Australian Seniors: 40,000 home care packages, 34,000 extra training spots, 7,000 new personal care aides and 8,400 respite services will all be implemented this year. To help seniors better manage their medications, this Budget allocates more than $340 million to integrate pharmacy services into residential aged care facilities.
The government offers to assist more Australians in purchasing a property. According to Treasurer Mr Frydenberg, more than 160,000 Australians have purchased new houses in merely one year. To increase this number, even more, the government has boosted the Home Guarantee Scheme to 50,000 spots per year.
For single parents, the 2022 budget has raised optimism because the down payment for new homes has been lowered to as little as 2%. Even the $2 billion in the assistance offered by the National Housing Finance and Investment Corporation will positively impact housing affordability.
- Regional Investment Package
Regional buyers will also profit from the government’s budgetary support for home ownership in Australia and single parents and first-time buyers. In Pilbara, Hunter and other Northern regions, the government has developed a regional investment package that includes significant investments in energy, infrastructure and agriculture. The long-term investments have been designed to create new opportunities and boost economic expansion. Additionally, the regional investment package includes:
- $7.4 billion investment in additional dams and water projects to increase irrigation and improve essential water security.
- $2 billion regional acceleration initiative for investments in regions’ supply chain resilience, educational infrastructure, export market development and skills.
- Telecoms initiative worth $1.3 billion increases cell coverage along 8,000 kilometres of regional transportation networks.
- Flood and Fire Support
Since the government has prioritised flood recovery in the 2022 budget, the Federal Government will dedicate $6 billion solely to disaster recovery and relief. This allocation of money is a response to the recent flood in Queensland and New South Wales. The Federal Government has also spent around $558.5 million for community recovery and cleaning, along with the $300 million from the Emergency Response Fund for post-disaster resilience and recovery initiatives.
The social services, temporary accommodations and income support will set the government back $2.2 billion. Even the Black Summer Bushfire Recovery Grant program has received $111 million from the Federal Government. Such a response from the government in the form of recovery support, cleaning and resilience is going to be accepted by both property owners and property buyers in Sydney with alacrity.
Since the start of rail and road projects directly affect the rate of properties and their worth, both projects have been included in the 2022 budget, and this announcement has set the right course for both Buyers Agency Sydney and Property Buyers Sydney.
The list of road and rail projects brought into the spotlight by the 2022 budget:-
- The Western Australia METRONET project
- The Faster rail service from Brisbane to the Sunshine Coast
- The Tasmanian Great Eastern Drive
- The Northern Territory Project for Central Australian Tourism Road
- The Intermodal Terminals of Melbourne and many more
The government has budgeted $500 million through the 2022 budget to assist local councils in completing all of their top priority projects, and $880 million will be used to increase Australia’s connection to airports and transportation hubs.
Another good part of the government initiative that reflects in the 2022 budget is the re-iteration of the allocation for the pool of flood and cyclone-related damages reinsurance. But remember that these new changes will only come into effect from 1 July 2022. This marvellous initiative has been backed by a government guarantee of almost $10 billion, and this is good news for many homeowners and property buyers in Sydney. The main objective of this new re-iteration of the pool is to promote quick recovery from the damage in northern Australia.
The pool not only collects information for better natural disaster planning but also gives significant savings on all properties that have completed any cyclone protection. Owners, buyers and sellers must do this to recover quickly from the real-estate market in flood and cyclone-affected areas.
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The 2022 budget has brought many new hopes, opportunities and reliefs for homeowners and aspiring property buyers in Sydney. The government has handled many property-owning issues that should have been addressed, from managing the flood recovery to making it simpler for single parents and first-time buyers to own properties.
Whether your property investment planning has been positively or negatively affected by the 2022 budget, proper planning is the one thing you always need in your arsenal. And if you are unsure how to begin on the right foot, whom to trust or how to navigate the property investment landscape, then we at Buyers Agency Australia are here to help you. Making your real-estate investment the best weapon for financial freedom is simply a phone call away.