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Latest data on the uptake of first home loan deposit scheme released

Updated

February 17, 2020 03:10:04

Nearly half the applicants using a new Federal Government scheme to purchase a property with a deposit of as little as 5 per cent are planning to buy outside Sydney, Melbourne or Brisbane.

Key points:

  • Figures show more than half the scheme’s applicants so far were under the age of 30, except in Sydney
  • There are 3,500 places left in the scheme this financial year with another 10,000 spots becoming available from July
  • Most of the buyers have been single buyers

But new figures show many younger buyers in Sydney are still struggling to get a leg-up on the housing ladder.

The Government has today released the latest data on the uptake of its First Home Loan Deposit Scheme, which launched at the beginning of this year.

Under the scheme, the Government offers loan guarantees for properties worth up to $700,000 in Sydney or other New South Wales regional centres. Prices are capped at $450,000 for the rest of New South Wales.

Melbourne buyers can spend up to $600,000 on a home while the limit is $375,000 across other parts of Victoria.

The figures showed more than half the scheme’s applicants so far were under the age of 30, except in Sydney.

Housing Minister Michael Sukkar acknowledged helping those younger city buyers was an ongoing challenge.

“There’s no scheme, including this one, that is a silver bullet to the difficulties that particularly younger people face in our major capital cities, where their jobs are,” Mr Sukkar said.

However, he said this deposit scheme was partially designed to encourage people to look beyond the capitals, by capping the property prices and including smaller and regional lenders.

“One of the things the Prime Minister and I wanted to do was make sure this didn’t just become a Sydney-, Melbourne-, Brisbane-centric scheme,” Mr Sukkar said.

“And if we didn’t pay such close attention to the way we designed it, it could easily have gone that way.”

Just a month-and-a-half into the program, the figures showed about 6,500 loans were being processed. Some of those have been approved for financing for a loan while others were at a much earlier stage.

That has left another 3,500 places in the scheme this financial year. Another 10,000 spots will become available from July.

The figures showed the average income of participants is $67,126 for single buyers or $111,534 for a couple.

The cap on an applicant’s income was $125,000 for a single buyer or $200,000 for a couple.

Most of the buyers have been single.

“We’ve certainly put in place modest price caps around the country — this is designed for people who are purchasing a modest first home,” Mr Sukkar said.

“Of course, if you’re on a single income, you’re … going to be more likely to be someone who fits within those price caps.

“If you’ve got a double income, perhaps your capacity is higher than a single, and my view is it probably pushes some people to looking at homes outside the house price caps.”

The data also showed 70 per cent of the certificates issued so far have been for houses. Apartments made up 25 per cent and townhouses made up 5 per cent.

Kristin Brookfield from the Housing Industry Association said the early data was encouraging and seemed to indicate many young buyers were willing to look beyond the east coast capitals.

“Young people are wanting to get into the market, they’re seeing the sense in getting into the market, and they’re going to those regional [areas] and getting houses which are more in the $400,000 mark rather than that Sydney $700,000 mark,” she said.

“Newcastle and the Illawarra have the same price cap as Sydney, which is $700,000 for the homes.

“But you would imagine that in those regional areas there’s a bigger choice in terms of houses, there is apartment building going on in those areas, unlike some of the more regional towns where you’re likely to see just houses and not very much in the apartment stock.

“So I think it really just reflects where people think they can afford to buy a house.”

However, Ms Brookfield worried the price caps under the scheme were still too restrictive for those wishing to buy a new home in Darwin ($375,000) or Perth ($400,000).

“We would like to talk to the Government about how we can stimulate new building in those regions,” she said.

The deposit scheme was first announced in the lead-up to the Federal Election.

Topics:

house-and-home,

money-and-monetary-policy,

business-economics-and-finance,

housing,

government-and-politics,

housing-industry,

australia,

melbourne-3000,

sydney-2000,

brisbane-4000

First posted

February 17, 2020 02:49:33


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