Helping hand for first home buyers.
5th November 2019
Helping hand for first home buyers.
Recent Corelogic data revealed most Millennials find raising a deposit the most significant obstacle to buying a home, but that could be about to change with the introduction of a new Federal scheme.
The First Home Buyers Deposit Scheme offers 10,000 people the chance to secure a property with just a five-per-cent deposit.
First raised as a pre-election promise, this 500-million-dollar plan would see the Morrison Government act as guarantor for low and middle-income earners who qualify for the scheme, allowing them to bypass costly mortgage insurance – and years of saving.
But the plan does come with a series of catches.
Firstly, this scheme is first-in, best-dressed and with only 10,000 positions available nation-wide, there will be a lot of hopefuls who miss out.
Secondly, price thresholds apply. In Sydney and other regional centres such as Newcastle, Wollongong and Lake Macquarie, the government will offer loan guarantees on properties worth up to $700,000.
In other rural areas across New South Wales, the cap will be $450,000.
National caps for First Home Buyers Deposit Scheme
State/Territory
Capital city and regional centres
Rest of the State
NSW
$700,000
$450,000
VIC
$600,000
$375,000
QLD
$475,000
$400,000
WA
$400,000
$300,000
SA
$400,000
$250,000
While $700,000 can get you a lot of house in Lake Macquarie, it doesn’t get you quite as far in Sydney.
How far does $700,000 get you in Sydney?
Within 10km of the city, you could purchase a unit in Ryde, Gladesville, Castle Cove or Earlwood.
If you’re willing to look within the 20km range, your options increase. Those that qualify for the scheme could buy a unit in Belrose, Bankstown, Auburn, West Ryde, Banksia, Enfield and Greenacre.
If it’s a house you’re looking for, you’re going to be looking at least 25 kilometres out of the CBD.
Fairfield Heights, Smithfield, Warwick farm, Ashcroft and Lalor Park all have median house prices that fall under the threshold.
Who is eligible?
Applicants must have earned less than $125,000 in the previous financial year as a single or $200,000 as a couple.
There will be no specific guarantees per state or territory, so if you are prepared when the changes come into effect, you have a chance of success.
There is still little information on how the application process will work, but it would be wise to have as many documents ready as possible, before the proposed launch date of the 1 January 2020.
Reactions to the scheme
There’s been mixed reactions to the scheme, many economists have suggested it doesn’t quite go far enough. It is an opinion also held by REINSW CEO Tim McKibbin.
“Anything that can assist first home buyers to achieve their dream of owning their own home is welcomed,” said McKibbin, “however, the scheme is limited to 10,000 purchases which is grossly less than those requiring assistance.
“The first home buyers problem needs to be resolved, that however will only come from a collective will to do so by all three levels of Government.”
Extract taken from REINSW Update report.