Homebuyers have been targeted by a new Coalition pre-election pledge to raise house price caps available with the Home Deposit Scheme.
Under the scheme – which encompasses the First Home Guarantee, Family Home Guarantee and Regional Home Guarantee – the government guarantees the home loans of eligible buyers with deposits as low as 5% (or 2 % with family home collateral), eliminating the need for mortgage insurance lenders.
The changes, which are expected to take effect from July 1, will raise existing price thresholds in most metropolitan and regional areas, meaning eligible home buyers will be able to buy homes with price tags up to 900 $000 in Sydney and $800,000 in Melbourne.
The biggest adjustment, however, will impact potential buyers in Canberra, with the price cap in the nation’s capital set to rise from $500,000 to $750,000.
Home Guarantee Scheme – Ceilings for capital cities and regional centers
|New ceiling (fiscal year 2022-2023)||Increase|
|New South Wales||$900,000||$100,000|
Announcing the move, Deputy Treasurer and Housing Minister Michael Sukkar said the changes reflected rising house prices.
“As a government, we fundamentally believe in the aspiration of home ownership, where people can build their own homes and invest in their future.”
“We recognize how difficult it can be to buy a new home or re-enter the housing market and that saving a deposit is the hardest part of home ownership. Adjusting the caps prices for the Home Guarantee Scheme, we are ensuring Australians have more options when buying a home.”
While tens of thousands of homebuyers have taken part in the scheme since its launch two years ago, there are concerns that it will do little for the broader problem of housing affordability.
“Programs like this only inflate prices further, ultimately making it harder for homebuyers to enter the market,” said Kate Colvin, national spokesperson for Everybody’s Home – a national campaign. aimed at solving housing problems in Australia.
“What we really need is investment to build more social and affordable housing. This is the best way to mitigate the spike in rents for people on modest incomes.”
Since December 2019, figures from the Australian Bureau of Statistics show that the average price of a residential home has fallen from $686,800 to $920,100.
From a buyer’s perspective, this price increase means that the money required for a 5% deposit on an average home jumped nearly $12,000 over the period, while a 20 % is now $46,000 more expensive.
To learn more about the Home Deposit Scheme, including the full range of price caps and eligibility requirements, visit the National Housing Finance and Investment Incorporation website.
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