Budget 2022: New Home Guarantee scheme to be expanded

As property prices soar, the government plans to expand a home buyers scheme that would allow more youth and single families into the market. Find out how it will work.

First home buyers will be given a leg up to get into the property market under the major expansion of a guarantee scheme to help young people, regional families and single parents in a “cost of living” pre-election budget pitch to Australian

In response to soaring property prices pushing the Australian dream of owning a home increasingly out of reach, the 2022-23 budget released on Tuesday will double the number of places offered through the New Home Guarantee scheme to 50,000 a year.

Prime Minister Scott Morrison has indicated the budget would have a strong focus on tackling rising living costs for all Australians, with inflation, house and fuel prices top of mind for voters mere weeks before the federal election must be called.

“The budget is all about ensuring we deal with those immediate cost of living pressures, which Australians are feeling all around the country,” he said.

Mr Morrison said the impact of Russia’s invasion of Ukraine on fuel prices, which were already starting to rise before the conflict, were firmly in his sights.

“We know this is biting and that we’ve done the homework and spent the time to get the right design on the packages to support Australians right now,” he said.

“The budget is also about our ongoing and successful economic plan that deals with the challenges into the future.”

Treasurer Josh Frydenberg. Picture: Gary Ramage

Treasurer Josh Frydenberg has confirmed fuel prices are a particular concern for the government, though a temporary cut to the 44-cents-a-litre excise, rather than a freeze on indexation, appears to be a more likely budget response.

If the fuel excise was cut by 5 cents a litre it would save motorists about $2.50 when filling a 50-litre vehicle, which would cost about $1bn over six months.

Housing affordability has also been thrust into the spotlight in the lead up to the election, after new research from the Property Council of Australia found one in five people wishing to enter the market believed it was out of their reach.

The national survey of 1100 people revealed 90 per cent believed high prices were the biggest barrier to buying a first home.

Under the government’s expansion of its guarantee scheme, eligible applicants will be able to purchase a home with a deposit as little as five per cent, or two per cent if they are a single parent, with the federal government guaranteeing the remaining 15 per cent so buyers avoid up to $32,000 in mortgage insurance.

Of the 50,000 annual places, there would be 5000 places specifically for single parents, and 10,000 places for first home buyers or those who have not owned a home in the past five years in regional Australia.

Treasurer Josh Frydenberg said doubling the size of the government’s scheme would help make home ownership a “reality for thousands more Australians”.

The guarantee is means tested at $125,000 for singles and $200,000 for couples.

Mr Frydenberg said doubling the size of the government’s scheme would help make home ownership a “reality for thousands more Australians”.

“We’re also supporting those in our regions, with 10,000 places per year under a new Regional Home Guarantee to assist eligible homebuyers purchase or construct a new home in regional areas,” he said.

This new regional component of the guarantee would commence on 1 October, which Mr Frydenberg said was three months earlier than Labor’s commitment.

Mr Frydenberg said since the broader scheme was first introduced in January 2020 it had assisted almost 60,000 home buyers purchase a property.

“It’s why, in tomorrow night’s budget, we’re supporting even more aspiring homeowners get into the market,” he said.

Last week Labor announced its own regional housing policy, offering 10,000 first home buyers a year under a similar plan to have the government guarantee 15 per cent of the property purchase price.

Labor’s housing spokesman Jason Clare said Australia was suffering a housing “crisis,” which was particularly hitting regional areas where prices had risen at a higher rate than in capital cities.

“This is about making sure no Australian is left behind,” Mr Clare said.

Reducing cost of living without driving up inflation is a key consideration for both major parties in the lead up to the election, due no later than May 21.
Mr Morrison said the Coalition would continue to tackle inflation through “strong financial management,” citing the government’s achievement balancing the budget prior to the pandemic.