The government’s long awaited response to spiralling house prices in some of Australia’s capital cities is to allow first home buyers to stash extra cash in their superannuation accounts to save for a deposit.
Treasurer Scott Morrison announced the new “First Home Super Savers Scheme” in the Budget on Tuesday night, as a housing affordability crisis grips parts of Australia, including in Sydney where prices rose by 19% last year.
Morrison’s scheme gives first home buyers the chance to sacrifice part of their salary and put it away in their superannuation account. It would be taxed at 15%, the same rate as normal employer super contributions.
But there’s a catch. First home buyers will only be able to sacrifice a salary to the maximum of $15,000 per year, and they’ll have to take it out once it gets to $30,000.
That’s just $30,000 for a house deposit. With bog standard homes in parts of Sydney and Melbourne going for north of $1 million and requiring a 20% deposit ($200,000 on a million dollar house) plus stamp duty, many will be left scratching their heads.
“There are no silver bullets to make housing more affordable,” Morrison conceded in his Budget speech.
“Under this plan, most first home savers will be able to accelerate their savings.”
There are other measures in the Budget which Morrison insists will help young people afford to break into the housing market. Among them is allowing people over 65 to receive tax breaks to downsize their house, which the government insists will increase supply and help drive down prices.
Calls to pull back on negative gearing and slash lucrative capital gains tax discounts appear to have fallen on deaf ears.
Instead, the housing affordability package includes a measure that will actually increase the capital gains discount from 50% to 60% for some investors.
There’s also a crackdown on foreign investors who, according to the government, are helping drive up house prices.
Overseas buyers will be taxed more heavily, and those that leave homes empty will be hit with thousands of dollars in penalties.