Treasurer Jim Chalmers has delivered his fourth budget in just three years — a pre-election rollout featuring familiar promises for aspiring buyers and measures for housing affordability.

Help to Buy Scheme

Initially announced in May 2022[i], the government has allocated an additional $800 million to the Help to Buy scheme. This scheme, which only became law last year, has received significant media coverage but has not yet been implemented. With an election scheduled in May, time could be running out.

Designed to assist around 40,000 homebuyers, Help to Buy is a shared equity scheme in which the government gives eligible homebuyers an equity contribution of up to 40% of the purchase price of a property through a shared equity loan. Moreover, the buyers will have to pay back the value of the equity stake when they sell their homes.

As part of the 2025 Federal Budget tweak for Help to Buy, the government increased the income caps from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents[ii]. Property price caps will rise and be tied to the average house price in each state and territory, aiming to give first-home buyers more options (see Table 1).

Table 1: Help to Buy: New Property Price Caps by Region

_{*New South Wales capital city and regional centre price cap is set at $1.3 million rather than at the median house price of approximately $1.5 million to ensure purchase prices remain within the borrowing capacity of first-home buyers}[iii]_.

According to the government, Help to Buy could take years off the time it takes to save for a deposit. And first home buyers on average rates with a $519,000 home will save about $900 per month when buying an existing home, and $1,200 per month when buying a new home[iv]. 

Angus Raine, Executive Chairman of Raine & Horne commented, “History shows that government schemes aimed at helping home buyers enter the market faster often fuel demand, which drives up prices.”

Another example is the 2025 Budget pledge to wipe 20% of student HECS debt if the government wins the next election. “While this could significantly boost the borrowing power of younger homebuyers, it may also contribute to further increases in property values,” Angus reasoned.

Supporting housing affordability and innovation

Apart from the additions to Help to Buy, other budget announcements include:

• Rolling out the first two rounds of the $10 billion Housing Australia Future Fund, helping deliver approximately 18,000 social and affordable homes. 
• Launching a $1 billion fund for crisis and transitional accommodation and investing $6.2 million over 3 years to support leading homelessness organisations.
• Investing $49.3 million supporting state and territory governments to supercharge prefabricated and modular home construction.
• Banning foreign buyers from purchasing existing homes for two years from 1 April 2025 to take pressure off the housing market.

Antonia Mercorella, CEO of the Real Estate Institute of Queensland (REIQ), stated that the Federal Government’s planned two-year ban on foreign investors purchasing established properties from April 1, 2025, is unlikely to have any meaningful impact on easing demand pressure in the housing market.

“This is because foreign investors are a small part of the housing market and there is already significant deterrents and restrictions in place for foreign buyers,” she said.

“These include being limited to brand-new properties or land to build (within a timeframe), an application fee for Foreign Investment Review Board (FIRB) review, and Additional Foreign Acquirer Duty.

“On the supply side, this ban could potentially limit the construction of new housing due to the ban, which includes foreign purchases to redevelop a property.”

According to the Register of Foreign Ownership of Residential Land, during 2022–23, foreign buyers made 5,360 purchases worth a total of $4.9 billion and 1,119 residential real estate sales valued at a total of $1 billion. Most of these transactions occurred in Victoria, Queensland, and New South Wales. Notably, new dwellings and vacant land represented 66% of these purchase transactions, indicating that a significant portion of foreign investment was directed toward new housing stock rather than existing properties[v].

[i] https://anthonyalbanese.com.au/media-centre/help-to-buy-chalmers-clare

[ii] https://www.minister.industry.gov.au/ministers/husic/media-releases/albanese-labor-government-building-more-homes-more-quickly-and-making-them-easier-buy

[iii] https://www.minister.industry.gov.au/ministers/husic/media-releases/albanese-labor-government-building-more-homes-more-quickly-and-making-them-easier-buy

[iv] https://ministers.treasury.gov.au/ministers/clare-oneil-2024/media-releases/albanese-labor-government-building-more-homes-more#:~:text=Help%20to%20Buy%20takes%20years,when%20buying%20a%20new%20home.

[v] Australian Taxation Office, Register of foreign ownership of residential land. (p. 2)