Budget Week! Exciting for some (and I know some accountants that watch it unfold like its Eurovision
Budget Week! Exciting for some (and I know some accountants that watch it unfold like its Eurovision), maybe not so much for others, as Labor announces their latest budget under the looming shadow of a Federal election.
Housing got a reasonable run of airtime, with a continued commitment to 1.2 million new homes to be built nationally across 5 years (predominantly privately funded, but with “support” through government policy and funding to keep things flowing) and an expanded “Shared Equity Scheme”.
The Shared Equity model is an interesting one because, if done correctly it actually has half a chance of making a meaningful difference to affordability for eligible buyers, regardless off the interest rate environment at the time.
Straight off the bat, there are income and property value limits – this is not a program to help people into their third investment property or upgrade to the top of Cityview. For someone under the income cap though and looking to purchase an average value home in Cairns, its an intriguing premise.
Basically, once approved under the program, you go and pick your property to purchase, and the government purchases a proportion of the property alongside you, lets say 30% as an example.
You remain wholly responsible for maintenance, rates, body corporate etc. but as you are only responsible for 70% of the value, your loan is reflective of that as the whole amount. That is, you don’t pay any interest on the government’s portion, or any kind of additional fees. Suddenly your cost of living in the property (at least from a mortgage perspective) is 30% less each month.
The intention is that over time, as you progress you are able to then buy back the government’s share by either refinancing or funding it otherwise. You can buy it out in one swoop or in 5% chunks bit by bit. Alternatively, on the sale of the property the government takes their full share there.
Now it hasn’t been made super clear how the government expects to participate in the upside or downside of a changing market, or whether its just “$100,000 in, $100,000 out”, but as a way to genuinely purchase sooner, without LMI, and with much lower ongoing costs, this really could be a game changer (for up to 10,000 families per year).
Kicking off late 2025 (provided Labor is still in charge, presumably), this is one program that is really worth reading up on if you are looking to get into the market and would appreciate a leg up.