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First home buyers win

One in three first home buyers were boosted by the federal government’s home guarantee scheme over the last financial year, a new report shows.

The National Housing Finance and Investment Corporation (NHFIC) this week released its fourth annual ‘Home Guarantee Scheme (HGS) Trends & Insights Report’, covering data on the First Home Guarantee (FHBG), Family Home Guarantee (FHG) and Regional First Home Buyer Guarantee (RFHBG) for 2022-23.

The report includes data insights during a challenging period for first home buyers with the rapid increase in interest rates impacting on housing affordability.

One of the key insights from the report is that the Scheme’s share of the First Home Buyer market has grown significantly. Across Australia, close to a third of first home buyers in 2022-23 were supported by the Scheme, a significant increase from the 1 in 7 during 2021-22.

The number of guarantees issued in 2022-23 increased materially, supporting around 41,700 Australians into home ownership (up from 32,500 in 2021-22) due to a lift in the number of places available.

Since its launch in October 2022, the new RFHBG has helped many buyers in regional areas into home ownership. Around 10,860 or more than one third of all HGS guarantees were issued to buyers in regional areas in 2022-23 up from around 7,390 in 2021-22.

An increasing proportion of younger buyers have participated in the Scheme each year since inception. More than half of all places under the FHBG and RFHBG in 2022-23 were taken up by people under the age of 30, up from around a third in 2019-20, the first year the Scheme was in operation. Interest from first home buyers aged 18-24 has risen substantially to around 14% of all purchases in the FHBG in 2022-23, up from 3% in 2019-20.

The Scheme is helping a growing number of key workers purchase a home. Around 7,721 guarantees were issued to key workers in 2022-23, up 37% from 5,650 in 2021-22. In 2022-23, more than 1 in 4 of all guarantees under the FHBG were issued to key workers such as teachers, nurses and social workers.

More than 9,700 households (just over 12% of total guarantees issued to date) have already transitioned out of the Scheme, with most of these buyers having accumulated enough equity to achieve a Loan to Value ratio (LVR) of less than 80% and therefore no longer requiring a guarantee. This demonstrates the temporary nature of support offered through the HGS with the Scheme acting as a gateway to home ownership.

Arrears under the Scheme remain low (less than 0.1%) and below broader market benchmarks for high LVR lending. Given the macroeconomic environment, in the coming year, arrears may rise in line with trends in the broader home loan market.

Chief Program Officer Home Ownership Jennifer Chew said the report demonstrates how each year the Scheme is helping more Australians, including key workers and those living in regional areas, buy their own home sooner.

“It’s great to see the increasing number of participants who have built up enough equity to transition out of the Scheme”, Chew added.

From 1 July 2023, the Scheme expanded to include eligible Australian permanent residents as well as Australian citizens, non-first home buyers who have not owned a property in the last 10 years and any two applicants broadly, such as friends, siblings and other family members, as well as married or de facto couples. In addition, the FHG expanded to include eligible single legal guardians with at least one dependent child as well as eligible single parents.

The full report is available on the nhfic.gov.au website.

About Adam Nobel

CEO | Principal
M. Bus, Grad Dip Adv, B.Int Bus, LREA

adam@hugoalexander.com.au

0417 007 001

Adam is the founder and Principal of Hugo Alexander Property Group. With a previous career in advertising, 22 years experience in property investment, and 16 years in Brisbane real estate, he knows the market inside out to ensure his clients grow their wealth faster.

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