THE Prime Minister’s plan to help first-home buyers purchase with only a 5 percent deposit could have a major impact on the broader economy, according to RiskWise Property Research.

RiskWise Property Research CEO Doron Peleg said the Coalition’s First Home Loan Deposit Scheme, particularly in the current market and with the increased likelihood of interest rate cuts by the RBA, was by far more effective than Labor’s proposed taxation changes and would support the market instead of further weakening it.

He said, based on previous outcomes when the first-home buyers’ grant was implemented by the Labor Government in 2008, there would be a positive flow-on affect to the broader market.

“When the grant was introduced it saw an increase in demand from first-home buyers for established affordable properties and this resulted in a larger number of sellers of those properties, who in turn became upgraders and therefore significantly increased the demand for more expensive properties," Mr Peleg said.

“This then had a further upward impact on the demand across the entire market.

“And this will help boost GDP growth, through an increase in household consumption, as well as have a positive impact on jobs and property-related costs.”

The Coalition government has announced it will underwrite home loan deposits for first-home buyers who cannot achieve the 20 percent that most banks require.

“Although the number of loans is expected to amount to around 10,000, when you take this amount and add in the saving of the LMI, potential interest rate cuts and the flow-on effect on upgraders, this could support particularly affordable markets that are more appealing to first home buyers,” Mr Peleg said.

“Also, the Prime Minister has said he would like to run the scheme through second tier lenders and this will further improve the position of non-bank lenders in the market.”

The First Home Loan Deposit Scheme, adopted from New Zealand’s Welcome Home Loan program and announced by the Prime Minister Scott Morrison at the Liberals’ formal campaign launch in Melbourne last week, will mean first-home buyers, who have been able to save a deposit of at least 5 percent, will be able to access a government guarantee for the remainder of up to 20 percent of a property’s value. It will also remove the costs of paying lenders’ mortgage insurance.

The scheme will offer up to $500 million in equity through the National Housing Finance and Investment Corporation, would start on January 1, 2020, and be capped for individuals earning $125,000 and couples earning $200,000.

The value of homes that can be purchased under the schemed would be determined on a regional basis. Labor has said it will match the Coalition plan, stating it could afford to do so as it was “closing loopholes” for the wealthy.

Mr Peleg said Labor’s proposed taxation changes, to limit negative gearing to new homes only and cut capital gains tax from 50 to 25 per cent, would have “unintended consequences” and further impact an already weak housing market.

“The property market has been experiencing ongoing weakness,” he said.

“Tighter lending standards, the findings of the Banking Royal Commission, political uncertainty, fears of the potential changes to negative gearing and capital gains tax, restrictions on foreign investors, unit oversupply and large falls in dwelling commencements have all had a material impact.

“The Coalition’s plan brings a number of potential benefits with a positive flow-on effect on the housing market and the broader economy. At this point of time when the market needs strong measures to support demand, the Coalition’s scheme, alongside potentially two interest rate cuts, will deliver good benefits across the board.

“First, the number of qualified buyers will increase. Many first home buyers who currently don’t have sufficient deposits will be able to significantly decrease the amount of time it takes to purchase a property, even for 90 percent LVR.

“Secondly, they will be able to save the costs associated with loan mortgage insurance which amounts to thousands of dollars and could be well into the five figures.”

In New Zealand, the Welcome Home Loan scheme, launched in 2003, means first-home buyers only need a 10 percent deposit as opposed to a 20 percent one normally required by most lenders.

www.riskwiseproperty.com.au

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MASTER Builders Australia has backed the First Home Loan Deposit Scheme announced by Prime Minister Scott Morrison. 

Denita Wawn, CEO of Master Builders Australia said, “The scheme will be a boost for both First Home Buyers and residential builders who are worried about the declining housing market.

“For many aspiring First Home Buyers it is the deposit gap rather than the size of mortgage payments that is the real barrier to home ownership and we think the First Home Deposit Scheme will help them overcome it," she said.  

“We have been calling for measures such as this scheme because this kind of targeted and practical approach will do more to assist First Home Buyers than doubling capital gains tax and restricting negative gearing.  

“The measure will be welcomed by home builders and tradies who are facing a softening housing conditions which are down by as much as 30 percent in some markets.

"A stronger building industry means a strong economy and this measure will provide some stimulus for the housing market at just the right time,” Ms Wawn said. 

www.masterbuilders.com.au

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QUEENSLAND'S resource sector companies are focused on building stronger bonds and delivering even more returns to local communities and all Queenslanders. 

The Queensland Resources Council’s (QRC) Chief Executive Ian Macfarlane said the latest research conducted by an independent research agency has reinforced the need for the sector to better explain its everyday importance, relevance and world class environmental standards to all Queenslanders. 

He said it was clear the industry, and the hundreds of thousands of Queenslanders working in it, must strengthen the understanding of all Queenslanders of the benefits from industry for all Queenslanders, particularly those who live in the South East corner of the State, now and into the future.

“This latest research backs our own State of the Sector report released in March which surveyed resource chiefs about the wider view across other industries to increase community appreciation,” Mr Macfarlane said.

“To highlight this point, 67 percent of Queenslanders surveyed as part of this independent research were either uninformed or had a balanced view on the resources sector. The research found that 20 percent could be described as pro-mining and 13 percent responded as anti-mining. 

“The opportunity is to listen to our community and tell our story to Queenslanders particularly how relevant resources are to them and of the benefits they each get from a strong and vibrant resources industry in Queensland.  Our sector is part of every Queenslander’s life, whether it’s the silver in their smartphones, the copper in their solar panels or the steel in their car. 

“Queensland’s resource sector contributes more than 80 percent to the State’s exports, supports more than 315,000 full-time jobs and is on track to pay more than $5.3 billion in royalty taxes to build schools, hospitals and roads. But we need to keep telling our story," Mr Macfarlane said.

“The quarterly State of the Sector survey found in the next 12 months an overwhelming majority of resource companies plan to invest more on working with local communities, with 68 percent of companies surveyed committed to increasing or significantly increasing community and social capability.

"As an industry, we need to be strengthening our linkage with our communities and local stakeholders. Mining offers so much locally – yet we are not doing a great job in reinforcing these links."

www.qrc.org.au

State of the Sector report is at https://www.qrc.org.au/wp-content/uploads/2019/03/State-of-the-Sector_Dec18_FINAL_compressed.pdf

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MORE THAN $1.8 billion per year in repair and maintenance work on negatively geared homes will be under threat from Labor’s policy to impose restrictions on negative gearing, according to Master Builders Australia.

Denita Wawn, CEO of Master Builders Australia said, “Thousands of small mum and dad building businesses and tradies in every city, town and region around Australia would feel the impact of Labor’s policy progressively if it is rolled out.

“This work is the bread and butter of so many builders and tradies and Labor’s policy will hurt the viability of their business and will put their livelihoods at risk.

“Repairs and maintenance and maintenance work is a lifeline for many home builders when times are tough as they have been in markets such as Perth and Adelaide for the past few years and we can expect the same in Sydney and Melbourne as those markets continue to fall,” Ms Wawn said. 

“This work is not about renovations or capital improvements, it’s not about adding swimming pools or pergolas, this is the day to day running repairs that keep a home up to standard for residents and renters. 

“Labor’s promise to restrict negative gearing will make investing in these essential repairs significantly less attractive as it is implemented,” Ms Wawn said. 

“The next Federal Government needs to back the thousands of small building businesses who repair and maintain negatively geared investment properties, especially as the housing market softens, not bring in policies that will put their businesses at risk,” Ms Wawn said. 

State/Territory Breakdown 

 Source: recently released ATO figures for year 2016/2017