First home buyer outlook improves as prices decline in Dec

Tuesday, 31 January 2012

Australian house prices declined in December, giving some hope to first home buyers about the outlook for more affordable home prices in the year ahead.

The RP Data-Rismark capital city home-value index declined 0.2% for the month of December, with Sydney the only capital to escape a decline in prices.

Capital city house prices fell 3.6% in 2011, with Brisbane the hardest hit, seeing prices down 6.8% last year and 0.6% for December.

First home buyers looking to enter the market have seen this as good news, although the deterioration in house prices is a growing concern for Australia's four major banks who together hold more than 80% of mortgages.

Property experts are hoping that the Reserve Bank of Australia will undertake further interest-rate cuts in 2012 to prevent any further falls in prices. The RBA next meets to consider interest rates on 7th Feb.

"There is no doubt that additional interest-rate relief in 2012 would afford a very welcome cushion to the housing market," said Tim Lawless, head of research at RP Data.

More than 90% of Australian mortgages are set at a variable rate, and interest-rate cuts typically serve as a boost to the property market.

What’s interesting is that even after the RBA cut rates in December, just the second interest rate reduction since early 2009, prices still fell broadly in the month.

Call to scrap First Home Saver Accounts and let Gen Y use super for deposit

Tuesday, 04 October 2011

A leading economist has called for a rethink of superannuation, suggesting that people in their 20's and 30's shouldn't be struggling to save a deposit for their first home while also contributing to their super.

Lateral Economics chief Nicholas Gruen told the recent tax forum in Canberra that as we increase super above 9%, we should allow Gen Y to use their superannuation savings as a deposit for a house. He argued this would be better than what he called the "Mickey Mouse system we have at the moment, which is a separate fund" - namely the first home saver account scheme.

Another prominent economist, Saul Eslake of the Grattan Institute however pointed to other solutions to the housing affordability issue, saying the tax system was "riddled" with loopholes, singling out the $4.5 billion paid each year to well off investors via negative gearing.

"There are now 1.7 million of them and they vote, which is why that subject is off the agenda for both major political parties," Mr Eslake told the forum. "There is no country in the world that allows negative gearing as generously as the Australian tax system does."

First Home Saver Accounts - new rules now active

Wednesday, 25 May 2011

Changes to First Home Saver Account scheme allowing early purchase became law on 25th May 2011.

First Home Saver Account rule changes are now active, allowing early purchasers to use the savings in their account towards their mortgage (after meeting the 4 years) rather than losing their first home savings to super.

This effectively means a FHSA holder can pay a deposit on their first home before meeting the four year rule, and have until settlement date to make further account contributions to maximise their account benefits. Once settlement takes place, no further contributions can be made but the four year rule must be met before their savings can be released and go towards their mortgage.

See more details after the jump.

First Home Saver Accounts - rule changes get green light

Tuesday, 10 May 2011

Changes to First Home Saver Account scheme allowing early purchase finally clear Parliament, bill awaits royal assent to come into effect.

Legislation to improve the flexibility of the First Home Saver Account scheme has passed both houses, exactly a year after being announced in the 2010 budget.

The rule changes will enable money in a First Home Saver Account to be paid into an account holder’s mortgage, if they buy a first home earlier than existing rules allow. While the funds will not be immediately available for use towards a deposit, the account can remain open (with no further contributions allowed) and after meeting the 4 year minimum qualifying period the money will be available to pay down the first home buyer’s mortgage.

Under the original rules, early purchasers would see their FHSA balance forced into superannuation.

First Home Saver Account rule changes - key points:

Early first home purchasers no longer penalised due to changing circumstances,
Savings in a FHSA can be paid into a mortgage rather than forced into superannuation,
Money must still be held in the FHSA until the end of the minimum qualifying period (usually four years),
No further personal contributions can be made into a FHSA once a home is purchased,
New rules are not retrospective, and only apply to houses purchased after the new legislation receives royal assent (date TBC – expected within the next month).

This change improves the flexibility of the First Home Saver Account scheme, and is a welcome recognition from the Government that first home buyers want to be able to make purchasing decisions appropriate to their changing circumstances.

Tell us what you think about the FHSA rule changes

First home buyers get stamp duty cuts in Vic budget

Wednesday, 04 May 2011

First home buyers in Victoria will save on stamp duty in measures announced in the State budget today.

From July 1 first home buyers purchasing property at the median house price of $565,000 will get a 20 per cent stamp duty saving of $5794 on a bill that is currently $28,970. Stamp duty will be progressively cut over the following three years to achieve a 50 per cent reduction by September 2014, equal to a saving of more than $15,000. Stamp duty savings will apply to first homes purchased up to a value of $600,000.

The government also extended Victoria’s first home buyer scheme for the next four years, where first home owners buying or building a new property up to $600,000 get a bonus $13,000 in metropolitan areas and $19,500 in regional areas. Eligible first home buyers of established homes continue to be entitled to a $7,000 grant.

Eligible Pensioners and concession card holders also benefit with no stamp duty on properties worth up to $330,000, and an increase in the stamp duty concession threshold for properties up to $750,000.

Victorian farmers aged 35 and under will also receive the full stamp duty concession on properties valued up to $300,000.

Victorian Treasurer Kim Wells said that about 157,000 households are expected to benefit from these savings over the next four years.

Read the budget announcement

Polls

Do the recent changes make First Home Saver Accounts more attractive?

	Doesn’t help much
	Improves the scheme
	Need to remove 4 yr rule

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