This article is from the Australian Property Journal archive
KEVIN Rudd announced his government would establish a First Home Saver Accounts scheme.
Rudd said Federal Labor’s First Home Saver Accounts will help boost national savings, with the accounts anticipated to hold around $3.5 billion in savings after three years.
He said the scheme will allow a couple – each on an average wage and saving 10% of their income – to save a deposit of around $64,000 over five years. This $64,000 deposit is around $14,500 – or 30% – more than could be achieved by saving through an ordinary deposit account. This benefit amounts to $2,900 extra a year in savings towards a home deposit.
The Real Estate Institute of Australia’s president Graham Joyce said the first home saver account scheme proposed by the ALP will help first home buyers kick-start their savings for a home deposit, by providing favourable tax treatment under the auspices of current superannuation arrangements.
However, Joyce said there will be no improvement in first home affordability until at least 2012, because that’s how long today’s savers will have to wait to be able to access their money.
“First home buyers presently only make up 17.1% of all dwellings financed, therefore the immediate problem is not being addressed. Moreover, capital growth in property over the next four years will erode savings.
“A more immediate approach to consider is allowing first home buyers to access their voluntary contributions to superannuation, taking advantage today of favourable tax treatment of their existing savings, rather than postponing the benefits for another four years,” he continued.
Joyce said at the Federal level, the ALP scheme is coupled with the first home owner grant.
“The grant should be index-linked to median house prices, and immediately doubled to $14,000, in order to maintain the financial weight it had in contributing to a home purchase as it did when it was introduced in 2000, when homes were around half the price they are today,” he concluded.
Rudd also announced a Labor Government will forgo $600 million in tax revenue – in the first three years – to give first home buyers access to the newly-created accounts.
Australian Property Journal
