Housing affordability in Australia is one of the biggest issues heading into this year’s federal election. First home buyers, in particular, are in a never-ending race, trying to save deposits, while watching house prices increase, making the prospect of buying a home ever more distant and unreachable. But it’s not all doom and gloom. The recently released federal budget laid down some additional assistance through a number of home buying schemes that mitigate the high deposits required for eligible first home buyers.
New Builds for Regional Buyers
If escaping to the country is something you’re keen on, then the new Regional Home Guarantee could open up opportunities for you. The scheme enables eligible buyers to take out a home loan with a deposit of just 5% and without the added expense and hassle of mortgage insurance. The government effectively becomes the guarantor for the loan. Australian citizens and permanent residents who have not owned a home for five years can access the scheme if they are purchasing a new build property or building a new home of their own. There will be 10,000 places available each year until June 2025. The scheme should have the added benefit of encouraging home building in regional areas.
First Home & Family Home Guarantees
The existing First Home Guarantee Scheme has also been extended with 35,000 places available each year for three years. Like the Regional Home Guarantee, it enables eligible first home buyers to purchase a new or existing home with a deposit as small as 5%. Similarly, the Family Home Guarantee Scheme enables single parents to purchase with a deposit as low as 2% – there are 5,000 places available. In both these instances, the government guarantees up to 15% of the loan so that mortgage insurance is not required.
The schemes are available for first home buyers who earn no more than $125,000 per year or $200,000 per year for couples. The homes must be below a certain price point – in capital or major regional cities the price is $800,000 and in the rest of the state it is $600,000.
Treasurer Josh Frydenberg said, “Since January 2020, the government’s Home Guarantee Scheme has helped almost 60,000 home buyers purchase their first home.”
A Word of Caution
According to the latest CoreLogic data, the median house price has risen 20.6% in the past year alone to a whopping $728,034 nationally and is much higher in capital cities. First home buyers must still be able to service the loan even with the reduced deposit, and with all the talk now being around the very real prospect of rising interest rates, many fear that the schemes are not enough and that they aren’t addressing the ongoing affordability issues for Australians buying their first home. Lack of supply and competing with investors are other issues that first home buyers face.
There are a number of state-wide grants and schemes available as well as federal schemes such as these and it pays to do your research. It is possible to be eligible for more than one scheme.
Think you’re ready to take the plunge and buy your first home? It’s easy to be overwhelmed. Talk to one of our expert sales agents today and we’ll get you started!