It was lauded as the solution to the nation’s real estate affordability crisis, but within days the Federal Government’s first-home buyer savings scheme has been slammed by money experts.
The government intended its First Home Super Saver Scheme to be the centrepiece of its budgetary changes. This initiative will allow people saving for a home to deposit up to $15,000 a year into their superannuation accounts before tax. They can then withdraw the funds and any associated interest later at a lower tax rate of 15 percent for their deposit.
However, as you can only participate in the First Home Super Saver Scheme for two years, the maximum amount you can save is $30,000. This is well short of the $187,000 deposit households need for the deposit and stamp duty on an average property in Sydney.
Treasurer Scott Morrison promised the scheme would “boost savings by up to 30 percent”. But Mark Beveridge, the director of Superfund Partners, says that by his calculations, the average Australian participating in the scheme would only save an additional $2,500 a year. He adds that even couples saving the maximum amount over the two-year period would be less than $10,000 ahead.
“As a financial planner, you want to get all the benefits you can, but is it going to make a huge difference? It’s not an earth-shattering free kick for young savers,” he told news.com.au. “I think the effect will be minimal, a small effect at the margins, a few crumbs.”
Economists also worry that the scheme could put more money into the real estate market, driving prices up. Finance guru Saul Eslake told ABC’s Lateline that the scheme also wouldn’t assist with the main driver of affordable housing: increased housing supply.
“We’ve got super-for-housing lite,” he explained on the program. “In other words, people will be subsidised to have bigger deposits and hence be able to take out larger mortgages than they would do otherwise.”
He added he hopes only a small number of Australians will participate in the savings scheme “because the more that do, the greater would be the upward pressure on housing prices.”
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