Andrews government’s $1.6b housing program slow to attract homebuyers

A $1.6bn home buyers scheme by the Victorian government has been labelled a ‘Band-Aid intervention’ by the opposition, which says it will only push up house prices.

New homeowner Vicki Stegink at home in Carnegie. Picture: NCA NewsWire / David Geraghty

Victorian Treasurer Tim Pallas has urged people to take up spots in the state government’s $1.6bn homebuyers program as the fund struggles to attract Victorians hunting on the property market.

Mr Pallas revived a push for Victorians to utilise the Home Buyers Fund on Thursday, saying it would lead to more people “realising their dreams of owning their own home”.

“We really want to encourage Victorians looking to get into their first home to recognise that the government is there for you,” he said. “We can be a partner. We’ll be a silent partner. People who may have been priced out of the market can get a foot in the door quicker, backed by the state.”

But the opposition labelled the program a failure and was only serving to push up house prices.

The scheme, which requires a 5 per cent deposit from participants, cuts the upfront cost of entering the housing market by allowing the government to buy 25 per cent of the property, which can then be bought back over time. In its first year of operation ending in October, 2000 of 3000 available places were taken up. The government then announced a $1.1bn top-up to the scheme, expanding it to 10,000 places.

Despite the new investment, just 500 people have secured homes through the fund since October and a further 200 have been approved to house hunt.

Opposition spokeswoman for housing affordability Jess Wilson said the policy was a “Band-Aid intervention” that would fail to provide long-term housing affordability and push up house prices.

“Low take-up rates show that Victorians know this policy fails to address the real issues of housing affordability,” she told The Australian on Thursday.

“The Andrews government’s answer to every policy problem facing Victorians is government ownership, including by attempting to tackle housing affordability by putting the government’s name on your land title.”

Victorian Treasurer Tim Pallas spruiks the scheme. Picture: NCA NewsWire / David Geraghty

Ms Wilson said unlocking land supply, sensible planning reform and reducing the tax burden should be the “starting point” to fixing Victoria’s housing crisis.

First-time homebuyer Vicki Stegink said she never would have met the deposit requirements for her $641,000 apartment in Melbourne’s southeast if it wasn’t for the initiative, despite putting 40 per cent of her fortnightly paycheck away for a home deposit.

“It was just completely impossible for even that amount of savings to keep up with what the market was doing,” she said. “If it wasn’t for the scheme I would still be renting at the moment.”

Ms Stegink said she was content with the government owning a quarter of her home until she could pay it off.

“The scheme gives me the security of being able to live in a home that I can call my own,” she said. “And I’m totally OK with either paying the government out their 25 per cent at some point down the line or paying it out at the time of selling the property.”

On average, buyers backed by the scheme paid a deposit of $35,000 on a $630,000 property, with the funding contributing about $155,000.

Participants must earn no more than $128,000 as an individual or $204,000 as a couple and are required to hunt for properties worth less than $950,000 in metropolitan Melbourne and $600,000 in regional Victoria.

Indigenous Victorians are only required to deposit 3.5 per cent and are eligible for a 35 per cent shared equity contribution.