Morrison’s pledge to help first-home buyers

A new plan to combat soaring prices will enable first-home buyers to purchase more expensive houses with a five per cent deposit.

First home buyers will be able to purchase more expensive houses with a five per cent deposit as the federal government expands its guarantee scheme to combat soaring prices.

From July 1, the price caps on new and existing homes which can be purchased with government assistance will rise nationwide, including from $700,000 to $800,000 in Melbourne and from $800,000 to $900,000 in Sydney.

There are 50,000 places available in the scheme, including 35,000 for first-home buyers who can avoid the upfront expense of lenders’ mortgage insurance when the government guarantees up to 15 per cent of their loans.

Scott Morrison said increasing the price caps meant “even more Australians can get into a home sooner”.

“Saving to buy a house has always been hard work and we know as prices have increased it’s been getting harder,” the Prime Minister said.

“That’s why these higher price caps will help more people realise their dreams and lock in a stronger future for themselves.”

Bridget Gardner bought a house using the first-home buyers scheme. Picture: Nick Clayton.

Lifting the price caps means buyers will be taking on even more debt — if they pass the usual loan and repayment assessments conducted by the banks — at a time when interest rates are expected to rise.

But Housing Minister Michael Sukkar said that saving for a deposit was “the hardest part of getting into home ownership”.

“Because 41 per cent of scheme-backed loans are ahead of their payback schedule, we are confident these adjusted price caps strike the right balance,” he said.

The guarantee scheme also includes 10,000 places for those wanting to buy or build new homes in regional areas, and 5000 places for single parents trying to buy their first properties or re-enter the housing market, who can receive a guarantee with a deposit of just 2 per cent.

Scott Morrison said increasing the price caps meant “even more Australians can get into a home sooner”. Picture: Christian Gilles

Under the changes, the price caps will increase by $100,000 in Brisbane, Perth, Adelaide and Hobart.

The capital city thresholds also apply to regional centres which are home to more than 250,000 people, such as Newcastle and Lake Macquarie, Illawarra, Geelong, Gold Coast and Sunshine Coast.

In regional Victoria and NSW, buyers will be able to access the scheme when purchasing homes worth an extra $150,000, while the biggest increase to the cap is in Canberra where it will rise from $500,000 to $750,000.

“By adjusting the price caps for the home guarantee scheme, we are ensuring Australians have more options when buying a home,” Mr Sukkar said.

Originally published as Morrison’s pledge to help first-home buyers