Federal budget 2022: First homebuyer scheme to be expanded

Tens of thousands more young Australians will be given a leg up to enter the housing market in tomorrow night’s federal budget.

Tens of thousands more young Australians will be given a leg up to enter the housing market in tomorrow night’s federal budget with a major expansion of the deposit guarantee scheme.

The scheme, which cuts the deposit required to buy a home to 5 per cent with the government guaranteeing the other 15 per cent, will be more than doubled to 50,000 places, the Herald Sun reports.

The 50,000 places will comprise 35,000 for first homebuyers in major cities, 10,000 for those wanting to buy or build new homes in regional areas, and 5000 places for single parents – either buying their first properties or trying to re-enter the housing market – who can receive a guarantee with a deposit of just 2 per cent.

By guaranteeing up to 15 per cent, the scheme allows borrowers to avoid tens of thousands of dollars in lenders mortgage insurance which kicks in when the borrower’s deposit is less than 20 per cent.

The scheme applies to new or existing homes worth up to $700,000 in cities and $500,000 in regional areas. It is open for singles earning up to $125,000 and couples earning up to a combined $200,000.

In last year’s budget the scheme, first introduced in 2020, was extended to an additional 20,000 first home buyers and single parents over four years.

Treasurer Josh Frydenberg told the Herald Sun the program had helped nearly 60,000 buy their first home since 2020.

“The Morrison Government is helping to make home ownership a reality for thousands more Australians,” he said. “In tomorrow night’s budget, we’re supporting even more aspiring homeowners to get into the market.”

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Nearly 60,000 people have accessed the scheme since 2020. Picture: David Swift

The Herald Sun notes that in the year to January, 160,000 home loans were approved for first homebuyers, compared with the five-year average of about 100,000.

In a statement on Monday, the government said the scheme had “particularly supported women and front-line workers, with one in five guarantees issued to essential workers, almost 35 per cent of which were nurses and 34 per cent were teachers”.

“Of total guarantees issued, 52 per cent of guarantees went to women, well above the market average of 41 per cent women, while 85 percent of family home guarantees were taken up by single mums,” it said.

The first home guarantee and family home guarantee will be available from July 1, while the regional home guarantee will be available from October 1.

Over the weekend, Labor revealed its proposed regional first homebuyer scheme, which would be available for anyone who has been living in the region for at least 12 months.

The Property Council of Australia has welcomed additional affordability measures but warned policymakers not to overlook chronic housing supply issues.

“Giving aspiring homeowners a leg-up to buy-in doesn’t solve the affordability crisis on its own,” Property Council of Australia chief executive Ken Morrison said in a statement.

“One of the main reasons we are seeing such housing stress in regional towns is that there has been a pandemic population boost without a corresponding boost in housing supply. And (Labor’s) announcement will not directly result in one new house being built.”

According to a Property Council survey released last week, 70 per cent of Australians now believe the dream of home ownership is out of reach for most people, and 90 per cent of aspiring homeowners say it would be key issue deciding their vote at the federal election.

“The National Housing Finance and Investment Corporation’s research released late last month showed we are going to be 20,400 dwellings short, on average, every year between 2025-2032,” Mr Morrison said.

“ All up that’s a deficit of 163,400 homes. Our polling released yesterday showed Australians of all ages are concerned about this issue, and the time is right for all policy makers – at federal, state and local levels – to get on and tackle it.”