Buyers told to chance the market by minister Sukkar

Michael Sukkar has urged first-home buyers to try and snap up a property now, warning housing prices are likely to increase.

Housing Minister Michael Sukkar: ‘If you’ve got an opportunity to get a foot in the market before then you should take it’. Picture: AAP

Housing Minister Michael Sukkar has urged first-home buyers to try to snap up a property now, ahead of the government’s signature loan deposit scheme starting next year, warning that housing prices are likely to increase.

Mr Sukkar’s bold comments come as the government puts the finishing touches on the First Home Loan Deposit Scheme, which Scott Morrison announced as a major pre-election promise. From January 1, it will enable some first-time buyers to purchase a house with as little as a 5 per cent deposit.

“If you’ve got an opportunity to get a foot in the market before then you should take it, given I think the market is starting to improve,” Mr Sukkar told The Australian. “Peopl­e who buy now I don’t think will regret it at all.

“A re-elected Morrison government has put a lot more confid­ence into the market. We’re seeing green shoots in Melbourne and Sydney in the last quarter and I think with low interest rates, with APRA reducing service­ability buffers, all those factors combine to confirm that optimism.”

Mr Sukkar’s intervention came as a Commonwealth Bank report released yesterday showed that 91 per cent of first-home buyers believed owning a home was within reach, up from 80 per cent last year.

Independent property econo­mist Andrew Wilson also said the fundamentals for first-home buyers had not been better “maybe ever”, with a record low cash rate of 1 per cent, expectations of further cuts, stamp duty concessions and the federal government’s scheme coming online next year.

Under the program, eligible first-home buyers with a deposit of at least 5 per cent will be able to ask the government to act as guarantor for the remaining 15 per cent of the deposit, and can avoid paying thousands of dollars in lenders mortgage insurance. Singles earning up to $125,000 and couples with a combined income­ of $200,000 or less will qualify.

While it is limited to 10,000 borrowers, Mr Sukkar did not rule out expanding the program and said he hoped that was a conversation the government would need to have, “because it’ll mean the scheme has turned out to be a success and there’s something there’s been a lot of demand for”.

The government is still consid­ering whether to put a cap on how many people can access the scheme in each state and territory or whether it should work on a “first in, best dressed” basis.

There will also be a cap on the amount a first-home buyer can spend on a property.

“The caps will take appropriate account of house prices in different markets,” Mr Sukkar said.

“We’re examining all options at the moment to make sure the scheme is as fair as possible in its availability to people, regardless of where they live, and is reflective of the broader first-home market.

“My advice would be continue to save for as big a deposit as you possibly can. Even though it’s a loan deposit scheme for those with deposits as low as 5 per cent, it doesn’t preclude you if you have a higher deposit. Keep saving.”

Mr Wilson, chief economist at My Housing Market, said the housing markets particularly in Sydney and Melbourne were “feeling for the bottom” but, while buyers were active, sellers were on strike. Mr Wilson predicted ­annual price growth of 3-5 per cent “in the best of circumstances” in most capital cities.

“It’s a very good scenario for first-home buyers,’’ he said. “They’ve still got those stamp duty concessions in NSW and Victoria, where they don’t have to pay stamp duty on a house worth up to $600,000 in Victoria and $650,000 in NSW.

“We’ve seen a surge in first-home buyer activity as a result of those concessions in the last year.

“(House prices) are levelling off but we have seen a bit of an increase­ over the last couple of months in first-home buyers, which reflects maybe a sense it’s a good time to get in but also lower interest rates.”

Victorian Treasurer Tim Pallas said yesterday the state was starting to see the property market “come back” and there had been a 10 per cent increase in first-home owners since the government introduced the stamp duty concessions two years ago.

“There was a time when we didn’t know when we were going to touch bottom but it’s clear that we have now,’’ Mr Pallas said. “I’m not putting the glasses down that we’re through the worst of it yet but all the data coming back is looking quite encouraging.’’

Mr Sukkar said he was committed to the January 1 start date of the scheme and insisted it would not have a “distortionary impact on the market”.

“The scheme has been designed­ not to distort the housing market in the same way that a first-home buyers grant did, which was in essence that it just pushed up the market, meaning the value of the grants in the pockets of vendors,” he said.

The scheme is designed to cut the time it takes to save for a deposit­, nine to 10 years for an average household, by at least half.

Mr Sukkar said he would introduce legislation in the spring sittings and expected it would pass through parliament before the end of the year. The National Housing Fin­ance and Investment Corporation, which will get a $500 million equity injection, will administer the scheme and partner with private lenders.

“My thinking at present is you would have a panel of lenders who are participants in the scheme,” Mr Sukkar said. “We are keen to ensure that smaller lenders have preferential access. There’s no doubt there’ll be big four involvement as well.”

NAB’s second-quarter Residential Property Survey forecast broadly flat house prices over the next year or so but showed that property professionals’ attitude was increasingly positive. “It appear­s that lower rates, fiscal­ stimulus, the neg­ating of previous tax policy fears and some easing in the macroprudential policies have all helped. As a result, the peak to trough in Sydney looks to be around 15 per cent and Melbourne around 11 per cent,” it said.