REIA lobbies for Canadian-style first-home buyer scheme
The Real Estate Institute of Australia is urging the government to adopt a successful Canadian scheme that allows first-home buyers to tap into their superannuation to assist with making their first purchase.
The Canadian Home Buyer’s Plan has been in operation since 1992 and allows first-home buyers to withdraw up to $25,000 from their retirement savings plan to purchase or build a home.
The scheme has proven popular, with nearly 1.4 million Canadians withdrawing money from their retirement savings to participate in the plan between 1992 and 2004.
During this period, over 12% of Canadian first-home buyers aged 25 to 44 used the scheme.
According to the REIA, the Canadian scheme does not disadvantage the retirement plans of first-home buyers. Under the plan, funds withdrawn from retirement savings need to be repaid over a 15-year period so as not to impact the ability to enjoy a comfortable retirement.
The average age of first-home buyers in Australia is in the early 30s, with 55% of recent first-home buyers aged 18 to 29 and just over a third (34%) 30 to 39.
The institute has presented the Canadian plan to the government after it was floated at the October tax forum In Canberra by Nicholas Gruen, CEO of Lateral Economics.
“With the number of first-home buyers participating in the housing market declining considerably over the past two years, it is crucial that we look at ways to assist this group to enter the market,” says REIA acting president Pamela Bennett.
“There is proof that the scheme is working in Canada and we should be drawing on this success to assist first home buyers in Australia.
“There has been some speculation that first home buyers in Australia would not have enough in their superannuation for the deposit on a home. However, in 2007 the median superannuation balance for those who were 25 to 34 was $28,999 and $63,600 for Australians aged between 35 and 44,” Bennett says.
“The Canadian Home Buyer’s Plan is the perfect example of this proposal in action and REIA would like to see it implemented in Australia as a solution to overcome the problems faced by first-home buyers.”
While the most recent REIA/Deposit Power Housing Affordability found the number of new finance commitments to first-home buyers increased 13.4% to a two-year high of 22,992, for the year to June, new finance commitments to first-home buyers have decreased by 2.1%.
Over the June 2011 quarter, the average loan size to first-home buyers increased 2.5% to $283,900, though this is down 1% for the year.
