First home buyers have largely been ignored in last night’s federal Budget, according to Real Estate Institute of Australia (REIA) CEO, Amanda Lynch.
“We had hoped the Government would recognise the need to directly intervene and not leave housing affordability dependent solely on the whim of the banks,” Ms Lynch said.
“One of the most effective housing policy instruments in assisting first home buyers is the First Home Owners Grant, but it has been allowed to lose more than half its value relative to purchase prices since it was introduced in 2000.
“The Budget might fund new cost of living relief for Australian families but it fails to address what most Australians see as a priority – housing affordability.”
Ms Lynch said while the Budget should help create conditions where further rate cuts are possible, there are no guarantees lower interest rates will find their way to borrowers.
“The Government has said returning the Budget to surplus sends a very clear signal to the world about our strong economic fundamentals, and gives the Reserve Bank flexibility to cut interest rates further if it thinks that is needed,” the REIA said.
“Since peaking in the early nineties, home loan affordability has been trending downwards to alarming levels."
Ms Lynch said first home buyers have been very cautious in early 2012, with the number of first home buyers as a percentage of total owner occupied housing commitments decreasing to 17.2 per cent in February, down from the long-term average of 20.2 per cent.
The Housing Industry Association (HIA) said housing affordability could have been addressed with additional support for the building sector.
“At a time when new home building is in decline in virtually every state and territory, the Budget has failed to deliver any new measure to reinvigorate the home building sector, despite the sector’s health being absolutely crucial to a healthy domestic economy,” HIA’s senior economist, Andrew Harvey, said.
“Despite this tight budget it is sensible that the Government has retained its existing commitments to the Housing Affordability Fund and the National Rental Assistance Scheme, and has also continued to invest in training and skills, which are essential ingredients to the delivery of affordable new housing.”
“However, the Budget was an opportunity to introduce measures to progress housing supply-side reforms with the states and territories, reduce the excessive tax burden on new housing, and expand and extend existing measures aimed at boosting housing supply,” said Mr Harvey.