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As part of the Housing Industry Association’s pre-budget submission it said while the recent spike in demand for new homes has been exacerbated by the COVID-19 pandemic, many of the affordability issues are an enduring legacy of the past policy failures that have impeded the efficient supply of housing.
The HIA anticipates demand for residential buildings will remain elevated throughout 2022.
Stating that low-interest rates for borrowers, fiscal stimulus measures and more positive employment outcomes than had been feared, have combined to have a positive impact on housing market sentiment.
Further, changes in household spending in response to lockdowns and border closures had led to additional demand for residential buildings.
In its pre-budget submission it recommends; a national housing and land supply strategy must be developed, reform to inefficient taxes, equitable access to capital, a well-trained workforce and the First Home Loan Deposit Scheme to be extended.
“A place in the [First Home Loan Deposit Scheme] is likely to become more important to first home buyers as lenders apply Basel III prudential standards which impose higher risk weightings for mortgage lending with high loan to valuation ratios,” the HIA pre-budget submission said.
As part of the pilot, a further 10,000 places were made available in July 2020 and July 2021.
In response to the issues, the government’s Economic Recovery Plan included a further 10,000 places (the New Home Guarantee) specifically for buyers purchasing new homes.
While the number of first home buyers eased throughout the latter stages of 2021, lending data for first home buyer activity remained considerably higher than had been achieved throughout most of the last decade – which the HIA attributes, in part, to the success of the scheme.
“The Scheme has proven its value to first home buyers and should become a permanent tool in the Australian housing market to assist first home buyers achieve home ownership,” the HIA pre-budget submission said.
Among the HIA’s recommendations include:
- The government commit to making the First Home Loan Deposit Scheme a permanent program
- The government remove the 10,000 per annum cap on places in the scheme, or substantially increase the number of places over the budget horizon
- The transaction timelines accommodated within the New Home Guarantee should apply to any first home buyer purchasing a new home with a place in the First Home Loan Deposit Scheme