THE Coalition’s announcement of a First Home Loan Deposit Scheme has received a tick of approval from the property industry.
Property Council chief executive Ken Morrison said it was a smart proposal that would help first-home buyers and provide some confidence for the housing construction sector.
“It will deliver some welcome assistance for aspiring first home buyers who have been confronted by the ever-increasing size of the deposit required to buy a home as the market has risen in recent years,” Mr Morrison said.
“Notwithstanding the current downturn, housing prices have risen much faster than average incomes, making it an increasingly tough challenge to save for a deposit especially for first home buyers.
“This isn’t a hand-out but a hand-up for first home buyers; they will still be required to be approved for loans and be able to repay them, but it should make it easier for them to take their first step towards home ownership by getting over that big deposit hurdle.”
Master Builders Australia chief executive Denita Wawn said the scheme would do more to more to assist first-home buyers than doubling capital gains tax and restricting negative gearing,
“For many aspiring first-home buyers it is the deposit gap rather than the size of mortgage payments that is the real barrier to home ownership and we think the First Home Deposit Scheme will help them overcome it,” she said.
Ms Wawn said the scheme would also benefit residential builders who were worried about the declining housing market.
“The measure will be welcomed by home builders and tradies who are facing softening housing conditions which are down by as much as 30 per cent in some markets,” she said.
“A stronger building industry means a strong economy and this measure will provide some stimulus for the housing market at just the right time.”
The Real Estate Institute of Australia also welcomed the scheme, with president Adrian Kelly saying it addressed two hurdles facing first-home buyers – the deposit game and transaction costs – in a practical way.
“Under the proposal, first home owners will be able to buy their first home with a deposit of 5 per cent compared to 20 per cent which has become the industry norm post the Hayne Royal Commission,” he said.
“Not only will the scheme see first-home buyers achieve their home ownership much earlier it will save them a
considerable amount of around $10,000 by not having to pay lenders mortgage insurance.”
Mr Kelly said at the beginning of the year first-home buyers represented just 17.9 per cent of housing loan approvals, which could increase with the introduction of the scheme.
“The last time the Federal Government introduced a special measure for first home buyers was the First Home Buyers Boost during the GFC,” he said.
“This measure saw first home buyers, as a percentage of total loans financed, increase from 20.2 per cent in October 2008 to 31.4 per cent in May 2009.”
Mr Morrison said that with the appropriate controls and means testing in place, the scheme should enable more first-home buyers to engage in the market without adversely impacting on prices.