$2.2bn to help ease housing affordability

[Damian George]

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$2.2bn earmarked to target housing affordability
Super-style savings accounts to be set up for first-time buyers
The Government will subsidise the building of 50,000 rental properties

THE Government has earmarked $2.2 billion to help ease the country's housing affordability crisis.

What crisis?

The Australian dream of owning your own home has turned into a nightmare for thousands of would-be buyers struggling to break into the property market.

With interest rates at decade highs, around 575,000 Australian families with children are now in housing stress – or spending more than 30 per cent of their income on housing costs.

First home buyer help

To encourage first-time buyers to save a deposit for a house, superannuation-style bank accounts will be rolled out.

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The first $5000 saved in a First Home Saver Account each year will attract a 17 per cent contribution from the Government. Earnings on the account will be taxed at 15 per cent and withdrawals from the account will be tax free if used to buy or build a first home.

How it works

A couple each earning $61,000 save 10 per cent of their salary to their individual accounts.

They each receive a 17 per cent contribution from the Government on the first $5000. After five years the couple has saved a total of around $88,500.

This compares to the $75,900 they would have saved using a term deposit earning 7 per cent interest a year.

Rental help

The plight of tenants has not been forgotten in the Budget. There are over 2 million Australian households now renting - many of them low-income earners.

One of the key reasons for the current affordability problem is a nationwide housing shortage.

The country needs about 190,000 new houses to be built each year to cope with demand, much more than the 150,000 a year that are actually being built.

The Budget unveiled two key initiatives aimed at easing the shortage.

- The National Rental Affordability Scheme – where the Government will subsidise the construction of 50,000 new affordable rental properties over four years at a cost of $623 million.

- The Housing Affordability Fund which will provide $500 million to local and state governments to cut red tape for development projects and reduce the cost of new housing.