State help for home loans expanded, but it’s not hitting the right note: expert

If the government wants to help lower-income West Australians get on the property ladder they should address the high interest rates on government-supported home loans and increase the stamp duty exemption threshold, a leading Perth property expert says.

State government lender Keystart announced on Thursday it was increasing the property price limit eligibility on loans from $650,000 to $730,000 to reflect Perth’s current median house price of $735,000.

Keystart loan thresholds have changed.Credit: Heather McNeill

It will also increase the income limit eligibility for singles to $148,000 and $218,000 for couples.

Keystart offers higher-interest loans for people with smaller deposits than banks usually accept and facilitates the WA government’s shared ownership home loan model.

Eligibility limits on that model have also been tinkered with – increasing the property price limit from $535,000 to $615,000 and income limits rising to $123,000 for singles and $189,000 for couples.

Premier Roger Cook said the changes would enable more West Australians to enter the housing ownership market.

However, Strategic Property Group managing director Trent Fleskens said increasing thresholds for Keystart loans was not enough.

He said Keystart could afford to reduce its high interest rate of 7.85 per cent given its cost of lending was less than the big banks.

He said the government also needed to address other barriers to housing like stamp duty.

“It’s well and good that they’ve increased the threshold prices to reflect current market prices but dropping their interest rate when the cost of lending [at Keystart] is lower than any big bank in the country would actually make a bigger difference for consumers,” he said.

“Furthermore, if the government can recognise that Keystart needs to increase their limits to reflect house prices the big question remains – why aren’t they doing the same with the first home owners stamp duty threshold?

“It’s the WA government’s own example of bracket creep.”

Fleskens have been a long-time critic of Keystart’s high-interest loans.

This week alone, there were five writs lodged by Keystart against customers in the WA Supreme Court for non-payment of loans.

Following the Cook government’s changes in the May budget, the first home-buyer stamp duty exemption threshold currently sits at $450,000 while concessions are applied to homes up to $600,000.

The opposition parties are circling these thresholds as an election-winning issue with both the Nationals and Liberals offering major changes to the tax if elected in March.

The Nationals made a $160 million commitment to abolish stamp duty completely for first home buyers while the WA Liberals have vowed to raise the exemption threshold to $550,000 and the concession threshold up to $700,000.

The Liberals also plan to offer over 60s a $20,000 stamp duty rebate if they downsize their home.

Shadow housing spokesman Steve Martin criticised Labor’s rejections of both plans.

“WA Labor sitting on piles of cash and refusing to reduce taxes for struggling West Australian
families is another reason voters need to give Labor the boot in March 2025,” he said.

Labor has introduced much larger stamp duty concessions and exemptions for purchasers of off-the-plan apartments, including a 100 per cent discount on apartments worth $650,000 and a 50 per cent concession applied to any property over $750,000.

Housing Minister John Carey said the opposition had forgotten that policy.

He said Labor’s plan would actually facilitate new property build, while the Liberals’ plan would have a perverse outcome.

“[The Liberals’ policy] will provide more financial opportunity and assistance to those who already own a home versus those in first home buyers...our off-the-plan incentive or stamp duty relief is about encouraging new builds, and that is the answer to boosting housing supply,” he said.

Carey said his government was constantly looking at policy setting around Keystart to improve home ownership in WA, pointing to changes in its interest rate settings last year that saved customers thousands of dollars.

“You have to remember, most other states do not have this kind of incredible scheme and last year, we announced changes to the interest rate settings that actually provided financial relief of around $3000 per year,” he said.

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