In the latest changes announced in this year’s Federal Budget, the maximum releasable amount of voluntary concessional and non-concessional superannuation contributions has been increased from $30,000 to $50,000.

While the increase in the maximum releasable amount brings the FHSSS up to speed with current deposit requirements, the question remains whether this is the right investment option for first-home buyers.

Hung Tran, BDO Brisbane’s Real Estate & Construction Lead Partner (Image: Supplied)

BDO Brisbane’s Real Estate & Construction Lead Partner, Hung Tran, said the great Australian dream is to own a home, but younger Queensland buyers must carefully consider their circumstances and the impact on their retirement savings.

“With record low-interest rates, servicing a mortgage is arguably the easiest it has ever been,” he said.

“On the flip side, the local property market is quite hot with record sale prices being recorded in many locations across the state.

“We’ve seen a lot of buyers willing to spend more because of a fear of missing out, which could see many consider taking advantage of the new measures by drawing on the voluntary contributions they have made to their super to meet deposit requirements.”

While the long term nature of superannuation investment and home ownership correlate, using one to fund the other may not be suitable for everyone.

“For some first home buyers, withdrawing $50,000 from their superannuation could amount to far more in lost savings come retirement,” Mr Tran explained.

“Reducing your superannuation today means you are effectively forfeiting any investment growth on it, which could mean you need to reconsider your retirement plans down the track.”

Mr Tran said it is also important to note that there are caps on how much buyers accessing the scheme can spend on a property, so depending on a buyer’s property aspirations, the scheme may not be suited to their needs.

Additional measures for single parents wanting to purchase a home

An additional 10,000 places have been added to the First Home Loan Deposit Scheme, which will help approved first home buyers purchase or build a new home with a five per cent deposit.

In addition, the Government has continued its incentive to underwrite lender’s mortgage insurance for single parents, who will be able to purchase their own home with as little as a two per cent deposit.

“The two per cent deposit is very interesting,” Mr Tran said.

“Before applying for this scheme prospective buyers should consider their savings and how much they could contribute above the minimum two per cent to ensure the serviceability of their loan is feasible.

“In the current market, there is a risk that some buyers could unwittingly get themselves into too much debt and struggle to meet repayments.”

What about the popular HomeBuilder Scheme?

The budget highlighted the Government’s plans to spend $780 million on additional stimulus to the housing market through the extension of its HomeBuilder scheme.

“This scheme provides great assistance to Queenslanders wanting to get into the market or renovate existing homes, but people should assess how far the grant will go given the cost of construction these days.

“In addition, builders must be able to meet the timeframes required to complete the works in order for buyers to get the grant.”

These property focused measures are just some of those impacting individual and households from the 2021 Federal Budget.

To learn more about what these and other budget measures mean for you, your family or your organisation, contact a BDO expert today.