First-time buyers have also been finding different ways to get into the market – either turning to the bank of mum and dad, or Victoria’s shared equity scheme. Stamp duty exemptions are also on offer for properties under $600,000.
Mortgage broker and director of 40Forty Finance, Will Unkles, said the Home Guarantee Scheme had been very popular, with many of his clients applying for help to buy with a deposit lower than the usual 20 per cent.
“It’s a relevant program which goes to solving the main issue for first-home buyers, which is saving a deposit, but my macro view is any policy like this historically results in generally higher property prices,” Mr Unkles said.
First-home buyers are stretching themselves to buy a house, Dr Powell said.Credit:iStock
Though first-home buyers dreamed of buying a house close to the city, the reality was many were forced to compromise by buying smaller properties or apartments where they wanted to be. Others were moving further away to be able to afford a house, Mr Unkles said.
It’s what Jayden Pinto knows he will have to do to afford to get into the market.
Mr Pinto, 19, who lives with his parents in Moorabbin and pays board, is hoping to buy a fixer-upper in Geelong or Torquay to live in and renovate with help from the Home Guarantee Scheme.
Jayden currently lives at home with his parents.Credit:Aaron Francis
The astute sports/exercise science and business student has already saved an 8 per cent deposit by working full-time since leaving high school, and studying part-time at university.
“I’m really just trying to set myself up for the future,” Mr Pinto said.
He hopes to spend under $600,000, not only to qualify for the federal scheme but also for the Victorian Government’s stamp duty exemption.
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While government schemes may help buyers like Mr Pinto into the market, the flipside is many first-home buyers will not be able to afford to buy in the inner city, as previous generations have.
University of Melbourne postdoctoral research fellow in affordable housing Katrina Raynor said she was concerned the expanded federal scheme was encouraging people to take on a huge debt at a time when interest rates are about to rise and the broader housing market is expected to fall.
Despite the competition at the lower end, the risk is some buyers could be left with a loan that is higher than the value of their house.
She was also concerned the scheme was helping people into the market, when underlying equity issues that come with rising house prices are not being addressed.
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“I’m quite supportive of the First Home Loan Deposit Scheme, but only if it’s really targeted and supports people,” Dr Raynor said. “Like those who are paying high rents that can’t afford to save for a deposit.
“When you just roll it out on a large scale, it [continues to] push up demand and prices.”
Housing minister Michael Sukkar said that 60,000 Australians had already been supported into home ownership under the Home Guarantee Scheme.
“We want to help even more Australians into their first home or a home that they’ve built for their family, which is why we are expanding the scheme,” he said.
Melbourne entry-level house prices soar, widening the deposit gap
Source: Philippines Alive
