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Home Guarantee Scheme expands to 40,000 places

Property market leaders have welcomed the expansion of the Federal Government’s Home Guarantee Scheme (HGS), but cautioned rising interest rates and inflation remained key issues for first-home buyers.

The Albanese Government announced 40,000 new places under the HGS, starting today.

The HGS comprises the First Home Guarantee, previously known as the First Home Loan Deposit Scheme, and the Family Home Guarantee.

Under the expansion, the number of places in the First Home Guarantee has increased from 10,000 to 35,000 per financial year, while the Family Home Guarantee has a yearly allocation of 5000 places from July 1, 2022 to June 30, 2025.

Under the First Home Guarantee, an eligible first-home buyer can purchase a property with a deposit of as little as 5 per cent, while the Family Home Guarantee enables an eligible single parent with dependants to purchase a home with a deposit of as little as 2 per cent. 

Real Estate Institute of Australia President Hayden Groves said the REIA welcomed the HGS expansion and urged first-time buyers to speak to their brokers about securing a place in the scheme.

“For agents, we urge them to ensure potential first-home buyers and tenants looking to get into home ownership are aware of the scheme, in particular,” he said.

But Mr Groves also stressed that while the new opportunities were a positive measure, climbing interest rates and inflation were still key issues.

“We have already seen home buyer activity ease off due to renewed investor interest in the market and rising interest rates, but it is great to see this support come online as post pandemic economic conditions set in,” he said.

“The number of loans to first home buyers was down a whopping 32.8 per cent on what was recorded a year ago, however new loan commitments to this market increased 4.2 per cent in March after two months of decreases.

“Hopefully these conditions allow the marketplace to stabilise and offer new opportunity for first-time buyers to secure their own slice of the great Australian dream.”

Housing Industry Association Chief Executive of Industry Policy, Kristin Brookfield, also welcomed the scheme expansion, stating HIA had “always maintained that owning your own home is the best form of financial and personal security”.

“The guarantees offer help to those Australians looking to buy their first home, recognising that saving for a deposit is the largest obstacle to achieving home ownership,” she said.

“With the current cost pressures on households, a first-home buyer is facing years to save a deposit and in that time they risk being priced out of the market.

“Since its inception, HIA has been strongly supportive the Home Guarantee Scheme and its administration by the National Housing Finance and Investment Corporation (NHFIC). 

“To date the scheme has helped more than 61,000 Australians get into a home of their own.”

NHFIC also anticipates making 10,000 places available as part of the Australian Government’s Regional First Home Buyer Support Scheme over the coming year. 

NHFIC Chief Executive Officer Nathan Dal Bon said scheme property price caps had also increased, as had the number of lenders offering the scheme. 

“NHFIC welcomes the increase of Home Guarantee Scheme places by the Australian Government,” he said.

“As an organisation, we support Australians across the housing spectrum from those renting in community housing, through to Australians with the goal of homeownership.

“We expect many more Australians to be able to bring forward buying a home under the expanded scheme.”

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Kylie Dulhunty

Kylie Dulhunty is the Deputy Editor at Elite Agent.

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