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It appears that Gen-Y may have stopped crying into their smashed avocado and have become the cohort of entry-level buyers enjoying brunch in their own homes.

Only last year, the picture was very different: many first-home buyers were in a state of dismay with the prospect of home ownership, a mere pipe dream.

The market was running hot and wages growth was non-existent. Saving a deposit was mightily unrealistic under such conditions.

Between then and now, the government has thrown several lifelines to this dwindling buyer segment. The NSW Government introduced incentives and grants aimed at addressing affordability and these initiatives have helped to create a tsunami of first-home buyers.

Almost 20,800 first-home buyers have hopped onto the property ladder since the initiatives began. This equates to a 75-per-cent rise in loan activity compared to the year before, according to ABS housing finance data from July 2017 to March 2018.

State government incentives are clearly enabling a higher degree of home ownership, coupled with moderating prices, and fewer investors to compete against. It could be considered that these are the best buying conditions for entry-level buyers in several years.

As the end of the financial year draws to an end, a new opportunity arises. Many aspiring home owners will welcome the prospect of accessing their hard-earned cash ploughed into their superannuation under the First Home Super Saver Scheme. Another lifeline – strategy implemented by the Federal Government to help address home-ownership rates.

The fundamentals of this scheme are rational for some: it allows would-be first-home buyers to make additional contributions to their superannuation, reap the benefits of the concessional tax treatment and watch their savings grow (particularly since most superannuation accounts perform better than a bank deposit). The maximum contribution is $15,000 a year, capped at $30,000 for the life of the scheme.

Fast approaching, July 1 marks the date that aspiring first-home buyers who used the scheme can release voluntary contributions and associated earnings.

Although when setting a property budget, bear in mind that contributions are taxed at your marginal tax rate minus a 30 per cent tax offset.

Just the thought of these schemes and grants could make any first-home buyer dizzy. The path to home ownership is confusing and still financially tough.

Sydney is Australia’s most expensive city to buy, with a seven-digit median house price and median unit price higher than the house of every other major city except Melbourne.

The picture-perfect three-bed family residence on a quarter-acre block is a receding first-home dream. Even in light of the initiatives that address housing affordability, prices remain high and the path to home ownership is still not easy.

 

SMH/ 2 June 2018 

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