As the federal election draws nearer, prospective homebuyers are being advised to check carefully new schemes from the Coalition and Labor to assist them purchasing a property.
In response to the Coalition’s expansion of the Home Guarantee scheme, Federal Labor this week announced ‘Help to Buy‘.
The ‘Help to Buy’ scheme aims to increase home ownership rates by offering 10,000 Australians, each financial year, a chance to cut costs on buying their first home.
Eligible homebuyers will need a minimum deposit of two per cent of the purchase price of a home, and a Labor Federal government will contribute equity of up to 40 per cent.
The scheme applies to Australian citizens who earn less than $90,000 per year, or couples who earn less than $120,000 per year.
‘Help to Buy’ follows in the footsteps of several successful shared ownership schemes across the UK, Western Australia, South Australia, and Victoria.
Federal opposition leader Anthony Albanese announced the scheme on Sunday, days before the Reserve Bank of Australia announced the increase of the interest rate from 0.1 per cent to 0.35 per cent.
The hike is the first interest rate increase since 2010, and the first in an election campaign since 2007.
According to the Grattan Institute, between 1981 and 2016, home ownership rates among young Australians on a low or modest income have fallen drastically, from nearly 60 per cent, to 28 per cent.
University student and full-time worker Caneesyah Arvi, 22, from Willetton, says the scheme would be a stepping stone in helping her buy her first home.
“The 40 per cent, especially for our generation, it will make it a lot easier for us to afford to buy a house because most of us are struggling right now,” says Ms Arvi.
“With inflation, the rise in cost of living, and the ups and downs of the COVID-19 pandemic, we are drowning, so the 40 per cent will really help.”
Caneesyah Arvi
However, experts are advising first time homebuyers to proceed with caution.
Curtin University research fellow Dr Adam Crowe, who specialises in housing and population studies, says the scheme is a step in the right direction, but there is more to consider.
“The scheme has the potential to assist lower-to-middle income households into home ownership, but the extent of the scheme’s benefits will depend on how it intersects with the housing policy more broadly,” says Dr Crowe.
“Information around sub-letting or re-selling the home and the ability to renovate, for example, will require careful review.”