The Federal Budget, released on 11 May 2021 by Treasurer Josh Frydenberg, has been met with enthusiasm by the Australian building and construction sector. The industry has been buoyed by previous Federal assistance in the form of the HomeBuilder grants, which created strong demand for new homes and supported construction through the COVID-19 pandemic.
The latest round of funding in the Federal Budget represents a win for first-home buyers, who will be able to enter the market for the first time thanks to government schemes. Apprentices have also been supported through a new wage subsidy to allow more new apprentices and trainees to start their career in a trade.
Budget A Win For First Home Buyers
The Federal Budget has introduced two schemes that will support first home buyers in buying a home. The schemes have been welcomed by many, as property prices continue to rise and the dream of home ownership without government help seems increasingly out of reach for many Australians.
The First Home Buyers Deposit Scheme (FHBS) allows buyers to save only a 5 per cent deposit for their home. Under the scheme, the Federal Government acts as guarantor for the balance and the first home buyers avoid the costs of mortgage insurance. The FHBS existed previously but has been boosted by a further 10,000 places.
The First Home Super Saver Scheme (FHSS) has been increased from its previous amount of $30,000 to $50,000. Under this scheme, eligible first home buyers are allowed to dip into their Superannuation to withdraw up to $50,000 to use as a deposit towards an owner-occupied purchase. The increase will not take place until mid-2022 but is expected to make it easier for people struggling to save a deposit to enter the property market.
New Program Benefits Single Parents
The Budget also announced a program called the Family Home Guarantee. This newly introduced scheme provides eligible single parents with dependants the opportunity to build a new home or purchase an existing home with a deposit of only 2 per cent (subject to the person’s ability to service a home loan).
The Family Home Guarantee program is administered by the National Housing Finance and Investment Corporation (NHFIC) and guarantees up to 18 per cent of the value of the property to participating lenders.
10,000 Family Home Guarantees will be made available from July 1 2021 until mid 2025. Eligible people can apply for the program regardless of whether they are first home buyers.
Industry Reaction To First Home Buyer Boost
These schemes have been met with approval by the building and construction industry. “The First Home Loan Deposit Scheme [has] proven [its] value in assisting Australians to buy their first home sooner,” said HIA Managing Director Graham Wolfe.
“The changes to allow increased access to personal funds placed in a First Home Super Saver account will also provide greater incentive and motivation for tens of thousands of young, aspirational Australians to save a deposit for their first home through a tax effective scheme.”
New Apprentices To Enter Home Building Trade
More directly, the industry will benefit from the extension of the Boosting Apprentice Commencement wage subsidy. This scheme is designed to support businesses and Group Training Organisations to take on new apprentices and trainees.
Through the subsidy, any business or Group Training Organisation that engages an Australian Apprentice between 5 October 2020 and 31 March 2022 may be eligible for a subsidy of 50 per cent of wages paid to a new or recommencing apprentice or trainee for a 12-month period, to a maximum of $7,000 per quarter. There is no cap on the number of eligible trainees or apprentices.
“The budget measures to assist young workers enter the workforce will be critical as the nation recovers from the COVID-19 recession,” said Wolfe.
The halt on skilled immigration due to the pandemic has resulted in a skills shortage in some trades, exacerbated by the increase in construction work due to HomeBuilder. “Investing in skills and training today will support Australia’s productivity tomorrow and into the future,” said Wolfe.