Many Australians worry that they will never be able to buy a home.
Helping first home buyers
The Government will introduce enhanced First Home Saver Accounts to help families boost their savings for a first home, bringing home ownership within the reach of more Australians.
Following consultation, the Government has made the accounts fairer and simpler.
Australians will now receive a 17 per cent Government contribution on the first $5,000 of contributions made to their account each year. This represents an increase in the Government contribution for average wage earners from 15 to 17 per cent.
Earnings on the accounts will be taxed at a low rate of 15 per cent.
Withdrawals from the accounts will be tax free when used to buy or build a first home.
Helping people to save more will mean they need to borrow less for their first home. Lower levels of debt will place first home buyers in a more secure financial position when they are starting out.
First Home Saver Accounts
On 1 October 2008, Belinda and Josh each open their own First Home Saver Accounts.
They both earn average wages of $61,000 and save 10 per cent of their salary to their individual accounts. Each receives a 17 per cent Government contribution on the first $5,000 of contributions made to their accounts each year.
After five years, Belinda and Josh will have together saved a deposit of around $88,500 to buy their first home.
This compares to a house deposit of around $75,900 if Belinda and Josh had saved using a term deposit with the same 7 per cent earnings rate and the same contributions.
Belinda and Josh will benefit from using First Home Saver Accounts by around $12,600 after 5 years.