Housing affordability for young Australians has never been far from the centre of debate in the current federal election campaign.
Both major parties have pledged similar programs to help first-home buyers, who have access to the First Home Guarantee scheme, which was extended in the Federal Budget just days before the election was called.
Under the scheme, up to 35,000 first-time buyers need to commit only 5% of a standard 20% deposit and the government will guarantee the gap. Single parents have to find only a 2% deposit.
Usually, if you don’t have a 20% deposit you must take out Lenders’ Mortgage Insurance (LMI), which costs a buyer tens of thousands of dollars while protecting the lender from the loan being defaulted.
It’s a massive hit if you’re trying to break into the property market, and the government’s guarantee takes LMI out of the picture.
As an experienced agency in your area, we believe studying the major parties’ policies should be part of your research as you prepare for your first purchase. You should also watch price trends amid speculation and implementation of interest rate rises.
As the heat comes out of the real estate market and the federal and state governments maintain their various incentives, owning your first property may not be as difficult as you might imagine.
Here are the key pledges from the Coalition and Labor for first-home buyers and housing affordability:
The Coalition
Continue the First Home Guarantee to support homeownership and new housing.
Spend an additional $2 billion to the $3.5 billion pledged in low-cost financing for social and affordable homes, supporting 27,500 dwellings.
Increase the supply of new homes in regions by incentivising purchases with 10,000 low-deposit guarantees for buyers who have a 5% deposit and wish to buy a newly-built home.
Labor Party
The First Home Buyer Support Scheme will save buyers up to $32,000 in mortgage insurance and secure a home with a deposit as low as 5% while the government guarantees up to 15 per cent of the purchase price.
The Regional First Home Buyer Support Scheme has identical financial incentives. The program covers existing houses, townhouses and units, plus house-and-land packages, off-the-plan apartments and land with a contract to build. Applicants must live outside a capital city and be an Australian citizen aged 18 or over. They must live in the house purchased and have resided in a regional area for the previous 12 months. The regional program will start in January 2023 and cost $12.1m to the end of 2024-25.
In the immediate term, continue the operation of the Coalition’s existing scheme, reviewing the terms on a six-monthly basis.