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REIQ Journal : November 2008
4 INDUSTRY NEWS Boost to first home buyer First Aid: First home buyers set to benefit The Federal Government’s First Home Saver Accounts have been welcomed by the Real Estate Institute of Australia (REIA). The accounts, which are available through major financial institutions, are designed to provide a tax effective way for first home buyers to save. REIA president Noel Dyett said the accounts would provide a platform to increase the number of first home buyers, which would in turn stimulate the housing market. “This new initiative will help to promote a culture of saving among a new generation of Australians and will reduce their reliance on debt in the future,” Mr Dyett said. The scheme rewards potential home buyers through lower tax rates on savings and through a 17 per cent government contribution on the first $5,000 of individual contributions made each year. This, combined with a low tax rate of 15 per cent, means that a couple with average incomes who put 10 per cent of their earnings into individual First Home Saver Accounts, will save more than $88,000 after five years. REIQ Journal November 2008 This is almost $13,000 more than they would have accumulated in a standard savings account. The accounts are available to any person aged between 18 and 65 who has not previously owned a home, and contributions can be made by the account holder or another party. While the scheme is seen as a significant boost for first home buyers, Choice has warned that some banks aren’t meeting requirements. “Choice has discovered not all of these accounts are created equal and consumers need to be aware that not only do the interest rates on offer differ, but the way interest is calculated can make a big difference to the final deposit that’s saved,” Choice spokesperson Christopher Zinn said. The Treasury estimates that around $6.5 billion will be held in First Home Saver Accounts after four years. To check which financial institutions offer a First Home Saver Account option, visit the Australian Prudential Regulatory Authority website at www.apra.gov.au numbers The announcement of the Federal Government’s First Home Owners Boost initiative will help thousands of prospective home buyers, according to the REIQ. The Boost, which came into effect on 14 October, will see the original First Home Owners Grant of $7,000 doubled to $14,000 for first home buyers who purchase established homes, and tripled for the purchase of newly constructed homes that meet State energy efficiency and sustainability standards. All contracts entered into by 30 June 2009 will be eligible for the new additional assistance. “The Federal Government’s First Home Owners Boost is particularly good news for first home buyers in Queensland, who this year have also benefited from the new stamp duty threshold of $500,000 as well as steady property prices,” REIQ managing director Dan Molloy said. “Of all the dwellings financed in Queensland in August this year, only 15 per cent were for first home buyers. Historically this figure has been 20 per cent but has fallen over the past five years due to declining housing affordability. “While the current economic conditions are unprecedented in modern times, this initiative and lower interest rates will encourage more first home buyers who have stable employment and the ability to adequately service repayments into the market.”
December January 2009