First Home Saver accounts will be available from 1st October 2008, and are set to provide struggling savers with a better way to build a deposit for their first home.

FirstHomeSaver.com.au recently surveyed young Australians with an alarming 74% of respondents saying they believe housing affordability is set to get worse in the next 5 years. Those surveyed attribute the housing affordability crisis predominately to rising interest rates; however also felt that land supply constraints and poor Government policy had contributed to the problem.

What do you believe will happen with housing affordability in the next 5 years?

While 69% of firsthomesaver.com.au survey respondents believed the Government was not doing enough to help first home buyers to tackle the affordability crisis, the introduction of First Home Saver Accounts from 1st October 2008 may change all that.

The Government recently passed the laws introducing First Home Saver Accounts, which feature tax concessions and Government contributions to help struggling first home savers reach the first critical hurdle - saving a big enough deposit to get into the market. Up to the first $5,000 in savings each year will attract a 17% contribution from the Government, and earnings will be taxed at just 15%.

In its Social Trends 2008 Report released today, the ABS highlights the struggle facing first home buyers. The real cost of first homes almost doubled from $165,000 to $310,000 in the ten years to 2005/06. Compounding this are recent interest rate rises that translated to an average interest bill on first homes of $20,100 per year in March 2008, while in 2003 the equivalent figure was just $12,400. At March 2008 first homes buyers needed to borrow an average of $215,000 to reach the first rung on the property ladder.

The Government is hoping this initiative will help address the housing affordability crisis, and early indications look promising with 76% of those polled on the firsthomesaver.com.au website being supportive of First Home Saver Accounts.