Seniors seeking to downsize could provide a welcome boost to the apartment market if initiatives in the recently released 2021 federal government budget prove successful.
A move to lower the minimum age in the downsizer superannuation scheme from 65 to 60 is designed to encourage more seniors to sell their family home and move into smaller premises.
Apartments provide an affordable, secure option for older Australians wanting to boost their bank balance and simplify their lives while continuing to enjoy an urban lifestyle.
The scheme allows those aged over 60 to make a post-tax “downsizer” contribution of up to $300,000 per person into superannuation if they sell their family home.
“This measure will allow more older Australians to consider downsizing to a home that better suits their needs, thereby freeing up stock of larger homes for younger families,” the Government said in this month’s budget. The scheme has been available to those over 65 since July 2018 but has only had a modest uptake by about 22,000 people.
The government is hoping the combination of soaring prices in the current property boom and the lower access age will convince more older Australians to downsize.
Increase in super home deposits
Younger people wanting to take the plunge into the property market are also poised to benefit from a budget decision to boost the amount they can take from their superannuation accounts to put towards a deposit from $30,000 to $50,000.
Many in this demographic value an urban lifestyle and see the advantages of apartment living.
The changes to the Frist Home Super Savings Scheme require that the money comes from voluntary concessional and non-concessional contributions that people make to their funds and not from mandatory employer contributions. Nonetheless, this has been a controversial policy with the government defending the move against arguments retirement nest eggs should not be used to buy property.
“These programs are designed to achieve greater home ownership, including higher numbers of first-time buyers,’’ said Treasurer Josh Frydenberg. “That’s an important policy outcome that gives them more security in retirement, increases their standard of living and it’s consistent with Coalition values.”
Measures help single parents and first home buyers
Other budget measures set to benefit the property market include a Family Home Guarantee that will allow up to 10,000 single parents over four years buy a home sooner with deposits as small as 2 percent and expansion of the New Home Guarantee to provide an additional 10,000 places in 2021-22. The New Home Guarantee allows first home buyers to build a home or buy a newly built home with a deposit of as little as 5 percent. It applies to individuals with taxable incomes of less than $125,000 and couples with incomes of less than $200,000 who have not previously owned a property. Property leads the way in economic recovery
An additional $124.7 million in federal funding is also earmarked to help states and territories bolster public housing stock.
Property Council of Australia chief executive Ken Morrison said the budget initiatives built on measures that had enabled the property industry to lead Australia’s economic recovery.
“These schemes are targeted to help first-home buyers bridge the deposit gap and bring the aspiration of home ownership within reach of a broader range of Australians,” he said.