Clare O’Neil and Anthony Albanese at a Melbourne social housing building site earlier this month: The Federal Government is bringing forward by three months the start date to help more first home buyers with their deposits. Photo: Clare O’Neil.
Labor’s promise to guarantee first-home buyers can get into the housing market with a 5 per cent deposit will kick in three months sooner than initially planned.
The Federal Government will launch the expanded scheme in October instead of next year as was previously stated.
Under the program, the government acts as guarantor for the remaining 15 per cent of a 20 per cent housing deposit, reducing upfront costs for purchasers.
The expanded scheme is expected to assist about 70,000 first-home buyers in its first year.
News of the changes jammed Housing Australia’s website as prospective home buyers rushed to find out more.
By guaranteeing a portion of a first home buyer’s home loan, the government enables the purchasers to buy a home with a lower deposit and not pay lenders mortgage insurance.
First-home buyers will have access with no caps on places or income limits.
Property price caps will also be set higher in line with average house prices, to provide access to a greater variety of homes.
For the ACT, that cap will rise from $750,000 to $1 million. Elsewhere around the nation, the current caps range from $400,000 to $900,000 and will rise proportionately, with Sydney the highest at $1.5 million.
The median home price in Australia today is $844,000, and 5 per cent of that is $42,200.
The last time $42,200 covered the 20 per cent deposit for a median home was 2002.
Announcing the timeline changes, Anthony Albanese said the policy will help cut years off the time it takes to save for a deposit, while also saving tens of thousands of dollars on lenders mortgage insurance.
“We want to help young people and first-home buyers achieve the dream of home ownership sooner,” the Prime Minister said.
“Bringing the start date of our 5 per cent deposit scheme forward will do just that – getting more Australians into their own home quicker, while saving them money along the way.”
The Prime Minister said Labor was re-elected with a “clear mandate to bring down the deposit hurdle for first home buyers” and it is now delivering on the promise.
In just the first year alone, first home buyers using the scheme are expected to collectively avoid about $1.5 billion in potential mortgage insurance costs.
Housing Minister Clare O’Neil said the government was moving to “level the playing field and back a new generation of first home buyers into the housing market.”
“It’s just not right that an entire generation of young Australians have been locked out of the housing market – saving for decades while paying off someone else’s mortgage, so Labor’s changing it,” she said.
But shadow housing minister Andrew Bragg expressed concerns about the scheme’s expansion, saying it shouldn’t be open to everyone.
“These demand-side measures can be OK, but the main point about housing is to get the houses built,” he said.
“It’s a supply-side challenge.
“This is an uncapped scheme which is available to billionaires, or the children of billionaires, if they want to use a government program.
“I think we’re getting to a point where Australia is becoming a ridiculous nation where the taxpayer is underwriting mortgage insurance schemes for extremely wealthy people.
“I think it’s bizarre and ridiculous.”
The Real Estate Institute of Australia (REIA) has welcomed the decision to bring forward the expanded First Home Guarantee Scheme to October.
REIA president Leanne Pilkington described the move as a timely and practical response to housing affordability pressures.
“The removal of caps on income and places, along with increased property price thresholds, brings the scheme more in line with current market conditions and ensures broader access for aspiring home buyers across Australia,” Ms Pilkington said.
“This is a significant and practical step toward addressing the affordability challenge.”
Ms Pilkington also emphasised, however, that while support for first home buyers is vital, it must be complemented by supply-side measures to address the housing shortage.
“REIA also acknowledges the government’s commitment to build up to 100,000 homes exclusively for first home buyers. Policies that boost supply and provide targeted support for entry into the housing market are essential,” she said.
Mr Albanese said the government was focusing on supply by building more homes and was now pausing the National Construction Code – an outcome agreed to by last week’s productivity roundtable, which will cut red tape for builders.
Treasury advice is that the expanded 5 per cent deposit scheme will push house prices up, but Mr Albanese said the Federal Government’s housing package must be viewed as a whole.
“What it does is make sure that we get more people into the market, and the full suite of measures that we’re doing is about increased supply,” he said.
“More supply makes a difference for affordability as well. So, you’ve got to look at nothing in isolation.
“You’ve got to look at how the whole package, the $43 billion Homes for Australia Plan, works.”
Original Article published by Chris Johnson on Region Canberra.
