The Federal Budget released on Tuesday included several sweeteners for new homebuyers, which will be welcomed by those seeking to get a foothold in the property ladder as affordability continues to decline across the country.
UDIA particularly welcomed the Federal Government’s decision to introduce an annual 50,000 allocation under its expanded Home Guarantee Scheme and newly created Regional Home Guarantee.
These schemes are aimed at supporting homebuyers purchasing a new home by reducing the requirements for lenders mortgage insurance, which is generally required to be paid if a deposit is less than 20 per cent.
Under the updated initiative, there will be three home guarantee schemes.
The First Home Guarantee will provide 35,000 guarantees each year (up from the current 10,000) from July 1, 2022
The First Home Guarantee enables part of an eligible first homebuyer’s home loan from a participating lender to be guaranteed by the National Housing Finance and Investment Corporation. This means first homebuyers can purchase a new home with as little as a 5 per cent deposit.
Secondly the new Regional Home Guarantee will provide 10,000 guarantees each year from October 1, 2022 to June 30, 2025. This will be aimed at supporting homebuyers, including non-first homebuyers and permanent residents, to purchase or construct a new home in a regional area, subject to the passage of enabling legislation.
Finally the Family Home Guarantee has also been expanded, with 5000 guarantees each year from July 1, 2022 to June 30, 2025. This will support single-parent homes with children in purchasing their first home or to re-enter the housing market with a deposit of as little as two per cent.
While UDIA is very supportive of measures aimed at getting more people into their own secure housing, it will be critical that governments work together to ensure housing supply issues are addressed at the same time.
The new schemes will no doubt stimulate demand, which will also be boosted by expected population growth in the coming few years as we emerge from COVID-19 restrictions.
At both a national and state level, UDIA is calling for streamlined planning approvals and the delivery of enabling infrastructure – water, sewer, power and roads – to ensure new housing can be constructed to meet growing demand.
Without sufficient development-ready land, initiatives like the Home Guarantee Schemes will unfortunately fall short
NHFIC data shows it can take up to six years for new supply to reach the market, and this problem will only continue to grow if significant reforms are not implemented now.