A $400 million government scheme helped one-in-eight people buy their first property four years quicker, a report has found, leading to calls from an industry association for its expansion.
The federal government’s National Housing Finance and Investment Corporation has released the initial report evaluating the first home loan deposit scheme over a six month period ending 30 June.
The scheme is designed to help 10,000 people buy their first property with a mortgage deposit as little as 5 per cent without needing them to save for lenders mortgage insurance, a bank tax typically in the thousands levied on applicants who have a deposit less than 20 per cent.
Under the scheme, the government guarantees the remaining deposit shortfall.
“The scheme had an outstanding first year and has delivered on (the federal government’s) promise to help get Australians into their first home sooner,” assistant treasurer Michael Sukkar said.
“(It) has helped get Australians into a home of their own … years earlier than they had planned.”
Who took up the scheme?
Most people can afford the servicing of a mortgage, the report said, but only after they cleared the hurdle of saving a deposit.
The people who took the government up on the first home loan deposit scheme tended to be millennials aged from 25 to 29, the report found, although about 10 per cent were over 40 years old.
Half of all guarantees were issued to people who were single; they earned from $60,000 to $80,000. Couples had a combined income of $90,000 to $125,000.
Where and what did they buy?
Most of the properties purchased were based in a major city -- 62 per cent. The remaining were located in regional areas.
“Demand was … strong across south western Sydney (Campbelltown area) and the outer suburbs of Melbourne (Craigieburn and Frankston),” the report said.
However, applications were highest in the Toowoomba area of regional Queensland, where 70 loans were granted.
Most people bought a house -- about 70 per cent of applicants -- at a median price of $385,000.
About 25 per cent purchased apartments -- mostly in capital cities -- at a median price of $475,000
The remaining 5 per cent purchased townhouses.
Clearing a four year hurdle. In some cases, even longer.
The government’s role in guaranteeing part of a 20 per cent home deposit -- negating the need for applicants to save possibly thousands for loan mortgage insurance -- helped fast track applicants by four years on average, the report found.
The scheme helped shave five years off first home buyers looking for a property in New South Wales.
Out of the 10,000 applicants, 1804 were classified as ‘key workers’: teachers, nurses, defence force personnel, firefighters, police and childcare workers.
Another 10,000 people are able to apply for the first home loan deposit scheme, as of 1 July 2020.
Make it available to more people: HIA
The Housing Industry Association is campaigning the federal government to make the home loan deposit scheme available to more than 10,000 applicants at a time, claiming it overcomes key challenges in housing affordability.
“The time it takes to save a deposit is always a challenge for first home buyers, but … combining this with tougher lending restrictions had meant first home buyers were waiting years to achieve their home ownership dream,” a spokesperson said.
Making it available to more applicants would also help the construction industry, they said.
“Increasing the number of applicants … would not only help to boost the economy, but will clearly help lower and middle income workers move into a home of their own much sooner,” the spokesperson said.
“The report shows just 10 per cent of buyers accessed the scheme to buy a new home.”