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The government will make an equity contribution of up to 40 per cent for new homes and 30 per cent for existing homes, reducing the loan required, and allowing eligible participants to buy with just a 2 per cent deposit. Income and property price caps apply.
It joins similar schemes in NSW, Victoria and Western Australia, and is in addition to the Home Guarantee Scheme, which enables low-deposit purchases without mortgage insurance. Changes to the First Home Super Saver Scheme are also due in September, to give buyers more flexibility.
Slowing price rises and inflation could make it easier for first home buyers to save a deposit, while predicted rate cuts would boost their borrowing power.Credit: Dion Georgopoulos
A mix of first home buyer grants and stamp duty exemptions and concessions remain across the states and territories, including in Queensland, where the grant for buying or building a new home recently doubled to $30,000.
Domain’s chief of research and economics Dr Nicola Powell said first home buyers would face a challenging landscape in 2024, given prices were back at or near record highs in most cities and the cash rate was expected to remain higher for longer.
While the shared equity scheme would be a game changer for eligible first home buyers, Powell said it would do little to shift the overall outlook.
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“It will boost demand … and it will mean more entry-level buyers are fighting for similar-priced properties, and given we’re unlikely to see a dramatic change in supply, it means [the scheme] will support prices.”
She preferred the scheme to cash grants, which ultimately pushed up prices, but said the focus needed to be on the housing accord delivering its target of 1.2 million homes over five years.
Michelle May, of the eponymous Sydney buyer’s agency, said 2023 had been a tough year for first home buyers, and 2024 was likely to follow suit.
“We had a fair amount of first home buyer interest, probably more than [in 2022] but we’re finding most of them will have help from the bank of mum and dad … we see a mix of cash gifts, loans and guarantees,” May said.
A survey of mortgage brokers by Jarden late last year found about 15 per cent of all borrowers were purchasing with family assistance, with two-thirds of those receiving a cash loan or gift with an average value of $70,000.
Even with family help, May said most still had to compromise, with some looking further afield, to a smaller home, or different property type to break into the market.
“Ultimately, the reason it’s so hard for first home buyers is because demand is outstripping supply, and unless there is a significant change in that equation there is nothing to suggest prices will come down.”
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