In a bid to lure young voters, the Prime Minister has promised all first-home buyers they will only need a 5% deposit under a new election policy announced on the weekend.
Expansion of the First Home Guarantee Scheme
The big housing package is an extension of the federal government’s First Home Guarantee Scheme, allowing first-home buyers to bypass Lenders Mortgage Insurance (LMI).
An added sweetener for first-home buyers is the government’s pledge to spend $10 billion building 100,000 new homes, which will be exclusively available for first-home buyers entering the property market.
Eligibility Criteria for First-Home Buyers
Federal Housing Minister Clare O’Neil said that to be eligible, buyers must:
Be an Australian citizen
Be purchasing a home for the first time
Live in the property (not rent it out as an investment)
According to Ms O’Neil, the 100,000 new homes will take around eight years to build, with the federal government working with state governments to determine where they will be constructed.
“The housing that is being built today is not affordable for most young people who are entering the market and that’s the real problem,” Ms O’Neil told the ABC.
“What we are doing is supplementing supply at the affordable end of the market and that’s where it is really needed.”
Helping First-Home Buyers Enter the Market Sooner
This policy announcement will be hard to ignore for thousands of Australians desperate to get their foot on the property ladder.
The scheme will allow them to avoid the normal 20% deposit typically required to secure a home loan.
Prime Minister Anthony Albanese said the policy is about helping first-home buyers own their homes sooner.
“When a young person saves a 5% deposit, my government will guarantee the rest with their bank,” he said.
“This will help people buy their first home faster, without paying the burden of Lenders Mortgage Insurance.”
Increased Access to the First Home Guarantee Scheme
The current assistance scheme is income-capped, but this expansion should see the number of participants grow from 50,000 to 80,000.
Ms O’Neil addressed concerns that the scheme could drive up demand and further increase house prices, making affordability worse.
“We are talking about a pretty narrow band of new first home buyers in the market,” she told the ABC.
“We want more first home buyers into the market. If we are not willing to accept that, then we are basically saying we won’t do anything to help young people, and our government won’t tolerate that.”
