Want to buy your first home? Here's what's in the Budget for you

By

Published on

Home loan affordability has inched further within reach of first home buyers and single parents, but whether it will do much to narrow the gender and socioeconomic divides remains an open question.

The Budget's housing piece has three key parts.

First, 10,000 home loan guarantees will be provided for single-parent households, allowing them to put down a home loan deposit of 2%.

budget 2021 housing affordability first home buyers

Second, a further 10,000 guarantees will be rolled out as part of the new home guarantee scheme, allowing first home buyers to put down a deposit of 5%.

Finally, the maximum amount of voluntary contributions that can be released under the First Home Super Saver scheme has been upped from $30,000 to $50,000.

Ultimately, the barometer of success for these reforms will be the extent to which they narrow the gender and socioeconomic divides.

"The policy seeks to build gender and socioeconomic equality by offering more opportunities for home ownership which, you would expect, would lead to greater economic security which would be very important as people age," Zareh Ghazarian, from the School of Social Sciences at Monash University, tells Money.

"Women tend to have less superannuation than men, so having such housing policies will go some way to provide greater social and economic security."

Not surprisingly, the banks are fans of the measures.

"We know how challenging it can be for single-parents to support their family and save for a deposit for a home," says Commonwealth Bank CEO Matt Comyn.

"This announcement will come as a welcome relief for hard-working single parents, particularly those working in essential services such as education, health care and public safety, looking to buy their first home or re-enter the property market."

Peter White, managing director of the Finance Brokers Association, adds that the reforms "can be a turning point in the lives of many people who deserve a break - including younger couples starting out and single parents. It will be exciting for many Australians."

However, he points out that rising rates - which will eventually come ­ could put homeowners in a bind if property prices fall.

"In extremely low-interest-rate environments that create soaring house prices, government incentives to enter the housing market with very little deposit mean that some people could end up with a negative equity position when interest rates rise again and property prices fall or correct," he says.

"Therefore the FBAA still encourages people to save as much deposit as possible as this will leave borrowers in a far better position in the long term."

Get stories like this in our newsletters.

Related Stories

David Thornton is a journalist at Money magazine and is one of the hosts of the Friends With Money podcast. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.