Background to First Home Saver Account
Affordability
Research suggests that there is a tremendous crisis of housing affordability in Australia with almost 1000% increase in the land rates in last three decades and the wage to land price ratio increasing to 6:2 in 2008 as compared to 2:5 in the year 1973.In order to control the housing affordability and to encourage savings among the Australians, government has launched the First Home Saver Account policy on October 1st 2008.
It is believed that the promises made for First Home Saver Account made by Kevin Rudd during the Australian Federal Election campaigning in 2007, helped him win the election.
Background of the First Home Saver Account (FHSA) Policy
The growing property prices and the continuous downward spiral of the economy have prompted the Australian government to take urgent measures to encourage saving habits in the young Australians by introducing the FHSA policy. As per the surveys conducted by the Housing Industry Association, housing affordability in Australia has significantly decreased with first time homebuyers spending more then 30% of their annual wages on mortgage repayments. To combat the growing distress and for promoting economic wellbeing, First Home Savers Accounts are being launched by Australian government as promised in 2007 election campaigns.
The aim of FHSA is to prompt Australians to invest in their own property by providing the first time homebuyers with tax benefits and also financial assistance from the government.