First home buyers are set for a significant leg up with a new initiative from the Morrison Government to slash the size of a home loan deposit, announced last night.
Recognising that it can take nine to 10 years for an average household to save a deposit the Liberal plan is to help Australians realise the goal of buying their first home by cutting years off the time it takes to save up.
The First Home Loan Deposit Scheme will be available to first home buyers who have been able to save for a deposit of at least 5 per cent.
Slated to commence on 1 January next year, the scheme will be targeted towards first home buyers earning up to $125,000 annually or $200,000 for couples.
The value of homes that can be purchased under the scheme will be determined on a regional basis, reflecting the different property markets across Australia.
The plan for this Deposit Scheme is designed to complement the First Home Super Saver Scheme – but aims to help first homebuyers achieve their goals years earlier than would have otherwise been possible.
As well as the new First Home Loan Deposit Scheme and First Home Super Saver Scheme, the Morrison Government say they are continuing to take a comprehensive approach to housing affordability through ongoing initiatives such as releasing Commonwealth land, investing in infrastructure and ‘stopping foreign investors from getting a free ride.’
The Property Council has welcomed the Coalition’s announcement of targeted support for first home buyers through its First Home Loan Deposit Scheme.
“This is a smart proposal which helps first home buyers and provides some confidence for the housing construction sector,” said Ken Morrison, Chief Executive of the Property Council.
“It will deliver some welcome assistance for aspiring first home buyers who have been confronted by the ever-increasing size of the deposit required to buy a home as the market has risen in recent years,” Mr Morrison said.
“Notwithstanding the current downturn, housing prices have risen much faster than average incomes, making it an increasingly tough challenge to save for a deposit, especially for first home buyers.
“This isn’t a hand-out but a hand-up for first home buyers. They will still be required to be approved for loans and be able to repay them, but it should make it easier for first home buyers to take their first step towards home ownership by getting over that big deposit hurdle,” Mr Morrison said.
Mr Morrison also said that with the appropriate controls and means testing in place, this scheme should enable more first home buyers to engage in the market without adversely impacting on prices.
“It will also potentially be an additional stimulus for new housing construction which is one of the big engines of the economy and which has been looking at a significant downturn in activity.
“This scheme will help drive new housing projects once the current construction pipeline dries up, supporting jobs and housing supply,” Mr Morrison said.