13 March 2008

Federal Government supports co-ownership as a solution to worsening housing affordability.

Research from the National Centre for Economic and Social Modeling has found that 1 million low-to middle-income earners now spend more than 30 per cent of their income on housing. This indicates that housing affordability has indeed deteriorated and become more widespread in Australia.

But with interest rates at a 12 year high and Banks moving interest rates higher than the RBA’s recommendation, Australia's housing affordability crisis looks set to worsen.

In an attempt to combat this escalating problem the Government has gone beyond its initial federal election promise of establishing “First Home Saver Accounts” by declaring that people who buy property together under a co-ownership framework will be able to aggregate their First Home Saver loan accounts to substantially increase their windfall to purchase a home jointly.

Buying a home with others enables the costs of purchasing a home such as the purchase price, legal fees and stamp duty to be split amongst co-owners, making it easier and more affordable to enter the property market. With Treasury signaling its permission to join First Home Saver accounts together, first home buyers may have a very serious weapon in their arsenal to combat worsening housing affordability.

Jeremy Levitt from PodProperty, a co-ownership specialist, has welcomed this initiative, saying that “this represents acknowledgement by the Federal government that co-ownership is a viable model in tackling the mounting housing affordability problem”.

“In support of co-ownership, NSW Treasury recently passed the First Home Plus One scheme permitting eligible purchasers to buy property with other parties and still receive a stamp duty concession.”

“Now the new Federal Government has signaled its support for co-ownership with the First Home Saver accounts initiative and we look forward to helping embattled first home buyers get their foot on the property ladder when they buy their first home together.”