NSW’s experiment to make housing more affordable

Words and Producer: Bianca Farmakis

Hope may not be entirely lost for first home buyers looking to break into the brutal arena that is NSW’s property market. The state government has announced plans to contribute to citizen’s property purchases — for a price.

WHAT IS THE DEAL?

Under the new scheme, introduced by Premier Dominic Perrottet in February, first home buyers in NSW will receive a payment from the state government for their house deposit, in exchange for providing equity in the property.

HOW DOES IT WORK?

In a bid to address the state’s affordability crisis, the scheme will see the government pitch in to the typical 20 per cent sale price deposit required for a property purchase. In return, they legally own a portion of the property in equity.

SO THE GOVERNMENT OWNS MY HOME TOO?

In a way. The scheme would require people to repay the government in instalments, or when the property is resold. The equity is the difference between the value of the property and how much is owed on your mortgage.

IS THIS ONLY FOR FIRST HOME BUYERS?

Mr Perrotet said the goal of purchasing a first home was becoming increasingly “unachievable” and noted the current property market was “unacceptable.”

HOW DOES THIS DIFFER FROM A BANK LOAN?

Banks are for-profit businesses, and charge interest for loans. Under the scheme, the government won't. They would assume part-ownership while the repayments are made.

HOW BAD IS THE HOUSING CRISIS IN NSW?

HAS THIS BEEN DONE BEFORE?

In 2021, the Victorian government piloted a plan called HomesVic Shared Equity Initiative. It is currently closed to new applicants, but offered initial participants a quarter of the total property cost.

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