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Home ownership measures working

Government schemes to help first homebuyers have been successful in helping young and older Australians alike in achieving homeownership, a new report shows.

The National Housing Finance and Investment Corporation (NHFIC) report, released this week, has revealed that since January 2020, the First Home Loan Deposit Scheme (FHLDS) and the New Home Guarantee (NHG) have supported some 22,879 home purchases across the nation by guaranteeing around $1.4 billion in deposit shortfalls.

Real Estate Institute of Australia (REIA) president Adrian Kelly said that closing the deposit gap is the major barrier to first home buyers entering the market, particularly in a fast-rising market.

“Both the FHLDS and the NHG have shaved off four years of deposit saving for eligible Aussies”, he said, adding that the initiatives had been taken up fairly equally by both genders.

“It’s great to see that 6,000 key workers have been supported into home ownership since the start of 2020, a fitting use of federal policy for our workers who have been crucial in that COVID-19 frontline response, including child care workers, teachers, nurses and first responders.”

Kelly noted that the schemes also helped those in relatively unaffordable cities such as Melbourne, where 109 guarantees were issued.

“First time buyers have responded and shown their willingness to move where the price is right, so they can get a foot on the property ladder”, he said.

“This is particularly the case in two-thirds of all scheme recipients in greater Sydney, who moved into a new home at least 30 kilometres away from the city’s central business district.

“You also have regional centres like Toowoomba benefiting, with nearly 100 recipients buying their first homes as part in the scheme there.”

According to the report, the median property price for single applicants was $397,000 under FHLDS and $465,000 under NHG, with gender distribution broadly equal across both schemes.

Over 2021, more than one-third of all guarantees were issued to single applicants earning less than $80,000, which is well below the $125,000 eligibility income threshold.

Despite increasing property prices, the amount of debt first homebuyers accumulated under the schemes relative to incomes has declined modestly.

The research paper covers data for 2021. Under either scheme, eligible first home buyers can purchase a home with a deposit of as little as 5%, with NHFIC guaranteeing scheme lenders up to 15% of the value of the property financed by an eligible first home buyer’s home loan.

About Adam Nobel

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, 20 years experience in property investment, and 14 years in Brisbane real estate, he knows the market inside out to ensure his clients grow their wealth faster.

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