ALP lifts housing scheme’s price caps

The federal government has raised the property price caps for first-home buyers who are looking to secure a property in the nation’s two largest cities with the assistance of the Help to Buy scheme.

Federal Housing Minister Julie Collins. Picture: Nikki Davis-Jones

The federal government has raised the price caps for first-home buyers who are looking to secure a property in the nation's two largest cities with the assistance of Anthony Albanese’s flagship Help to Buy scheme.

Under the controversial shared-equity proposal, up to 10,000 first-time property buyers each year will be able to ­purchase a home valued up to $950,000 in Sydney and $850,000 in Melbourne with as little as a 2 per cent deposit.

In return, the government will secure a 30 per cent equity stake if they buy into the established market or a 40 per cent share in a new build.

The price caps in the two cities are $50,000 more than are ­offered under the alternative Home Guarantee Scheme, introduced by the Morrison government in 2020. The caps in Brisbane ($700,00), Adelaide, Perth and Hobart ($600,000) remain the same, as well as in the remaining capitals and regional areas.

However, only singles earning up to $90,000 each year and couples with a combined income of $120,000 will be eligible. They will also have to meet their lender’s serviceability requirements and cover all transaction costs, including stamp duty.

When the property is sold, the government will receive a share of the sale equal to the value of its equity stake.

A public consultation of the parameters of the Help to Buy program direction will run from Tuesday until May 21.

The scheme, which is slated to run for four years, was first announced during the 2022 election campaign. While the legislation will pass through the lower house without the support of minor parties, it will likely struggle in the Senate without the support of Greens, who hold the balance of power in lieu of the Coalition’s support.

Federal Housing Minister Julie Collins accused Labor’s opponents of standing in the way of helping thousands of people, particularly renters, from buying their own home.

“The Liberals and Greens should stop standing in the way of Help to Buy and support it in the Senate,” Ms Collins said.

“Our ambitious housing reform agenda is working across the board – more help for homebuyers, more help for renters and more help for Australians needing a safe place for the night.”

The Greens have described the scheme as a “housing lottery” that would have a negative impact on the market, instead calling for the abolishment of negative gearing and a freeze on rent rises.

Economists agree the scheme has the potential to put some upward pressure on home prices, although the limited number of spaces will prevent any major spikes. Property prices have jumped 40 per cent nationally over the past four years and have nearly doubled in some parts of the country.