Five things to know about the 2022 federal budget for housing

Aspiring homeowners, regional buyers and low-income earners have emerged as the winners in a pre-election federal budget that aims to help more people get into the property market sooner.  

With housing affordability shaping up to be a major election issue, the government has unveiled a number of short-term measures to help first-home buyers and single parents get over the deposit hurdle and into the market.

The government has expanded its Home Guarantee Scheme to help more people get into the market. Picture: Getty

But social services groups have criticised the measures as ‘temporary fixes’ that fail to deliver permanent solutions for Australia’s housing affordability crisis.

Here’s the five key announcements for housing in the 2022 Federal Budget.

1. Home guarantee scheme expanded

The number of places in the government’s popular Home Guarantee scheme will more than double to 50,000 places per year, allowing more people to get into the property market sooner with a lower deposit.

Those guarantees will be split across the following three programs:

• First Home Guarantee (formerly named the First Home Loan Deposit Scheme)

A total of 35,000 places per year will be available for eligible first-home buyers purchasing a new or existing home with a deposit of as little as 5%, on top of other upfront costs.

• Family Home Guarantee

The number of places in the Family Home Guarantee will double to 5000 places per year, until June 2025, for eligible single parents with a deposit of as little as 2%, plus costs.

• Regional Home Guarantee

The newly announced regional program includes 10,000 places for eligible buyers purchasing a new home in regional Australia, with a deposit of 5% or more, plus costs. It’s not limited to just first-home buyers, but applicants must not have owned a home for at least five years.

PropTrack economist Angus Moore said the expansion of the scheme would help many first-time buyers overcome a major barrier to homeownership – the deposit hurdle.

“That’s important because for many first home buyers, it’s saving the deposit that is the constraint on homeownership,” Mr Moore said.

“For most borrowers, servicing a mortgage is not a constraint because of how low interest rates are.”

Strict eligibility requirements apply for each program, including income thresholds and price caps on properties that can be purchased. The updated price caps have not been released in the budget, with thresholds reviewed annually by the National Housing Finance and Investment Corporation (NHFIC).

As of July 2021, the NHFIC set out the following price caps for the First Home Guarantee and Family Home Guarantee:

A regional centre includes any centre with a population greater than 250,000. This includes the Gold Coast, the Sunshine Coast, Newcastle and Lake Macquarie, the Illawarra and Geelong.

Since these thresholds were set in July, property prices have risen by more than 10% nationally, Mr Moore said.

“That means many homes that used to be eligible for the scheme no longer are, and this is going to be particularly acute for buyers in Sydney where the median price is more than $200,000 above the scheme’s cap,” Mr Moore said.

“I would want to see the National Housing Finance and Investment Corporation reviewing those [caps] to check that they are still appropriate and serving the interest of first-home buyers while still achieving the aims of the policy,” Mr Moore said.

2. More money for affordable housing

The government also announced an increase to the lending capacity of the NHFIC, which provides low-cost loans to community housing providers of affordable housing.

The budget papers estimate the $2 billion increase to NHFIC’s liability cap will support around 8000 more social and affordable dwellings for vulnerable Australians.

An additional $2 billion has allocated to the NHFIC for affordable housing.

Mr Moore said affordable and social housing are important parts of the broader market.

“It’s good that we are doing more, but we’d be supportive of going further,” Mr Moore said.

Since its establishment in 2018, NHFIC has supported more than 15,000 new and existing affordable dwellings through the provision of low-cost loans to Community Housing Providers.

3. Infrastructure investment for the regions

People relocated to the regions in droves during the pandemic. Now, the government has announced a multi-billion-dollar targeted infrastructure plan to improve transport links between the regions and the capital cities.

Big ticket items include $1 billion for a faster rail upgrade between Sydney and Newcastle, $1.6 billion for the Brisbane to the Sunshine Coast rail extension, and $1.1 billion for the Brisbane to the Gold Coast faster rail upgrade.

Rail upgrades will better connect regional centres, like Newcastle, to their capital cities. Picture: realestate.com.au

Mr Moore said the measures would improve commutability to these regions as people return to the office.

“One of the key themes we’ve seen over the past two years is strong demand for [regional] property, as people were able to work from home and so didn’t have to commute,” Mr Moore said.

“For many people, commuting further a couple days a week and working from home the rest in exchange for more space, or living by the coast is a good trade off.

“But as people start to return to working in the office, at least part time, we might start to see pressure on the transport connections in these regional areas, which [these projects] could help alleviate.

4. Cost of living support

With inflation pressures driving up the cost of fuel, food and housing, and a looming rate hike to push up mortgage costs further, the government has announced several relief measures in the form of one-off payments and temporary cuts to petrol and income taxes.

• Fuel excise halved

The government confirmed it will halve the fuel excise (the tax levied on each litre of petrol and diesel) for at least six months.

The government estimates it could save households around $30 a week, or $700 over the six month period, based on a family with two cars.

• Cost of living tax offset

More than 10 million low- and middle-income earners could receive an extra $420 back on their tax returns following a temporary increase to the Low and Middle Income Tax Offset (LMITO).

Those already receiving the low- and middle- income tax offset will now receive up to $1,500 and couples up to $3,000 from 1 July this year. 

• One-off cash payment

Six million Australians will receive a $250 one-off cash payment to help ease the rising cost of living pressures.

The payment will be delivered within weeks to eligible recipients, including pensioners, carers and concession card holders.

Australian Council of Social Service CEO Dr Cassandra Goldie said the measures do little to address affordability issues long term.

“The budget does nothing to lift the incomes of people with the least,” Dr Goldie said.

“Whilst we welcome the extension of $250 bonus payment to people on pensions and allowances, when if you’re living on $46 a day, this payment will help for a week or two, but people have to pay the rent 52 weeks a year.

“Almost $3 billion goes to reducing the fuel excise, which offers little help at the bowser and would have been much better spent lifting income support and boosting social and affordable housing.”

5. Super saver scheme

An expansion of the government’s First Home Super Saver Scheme (FHSSS), announced in last year’s budget, will go ahead as planned from 1 July 2022.

The scheme allows first-home buyers to save part of their deposit by making voluntary contributions to their super, up to a certain threshold.

Treasurer Josh Frydenberg delivered a pre-election budget focused on the cost-of-living. Picture: Getty.

Under the changes, the maximum amount of voluntary contributions that can be released under the FHSSS towards a person’s budget will be increased from $30,000 to $50,000.

The government said 27,600 Australians have benefitted from the scheme so far.

Mr Moore said while policies aimed at helping people get into the property market sooner were good as in the short-term, more needed to be done to address housing affordability longer term.

“If we’re serious about solving housing affordability, the only long-term solution is building more homes,” Mr Moore said.