IN positive news for first-home buyers, the State Government announced it will temporarily increase Keystart income limits to help more people enter the housing market.
The previous income limits of $90,000 for singles, $115,000 for couples and $135,000 for a family will be lifted by $15,000 for singles and couples and $20,000 for families between July 1 and December 31, 2019.
This change followed the government’s $420 million extension of Keystart’s loan book in December last year, boosting its lending capacity to $4.8 billion.
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READ NOWTreasurer Ben Wyatt said while the current housing market was creating opportunities for first-home owners, it was clear the banks had become more cautious with lending in the wake of the Hayne Royal Commission, creating a barrier to some people realising their dream.
“We have implemented these temporary changes to make Keystart finance available to people who may have been unsuccessful in applying for a home loan with a bank,” he said.
“The State Government’s $10,000 First Home Owners’ Grant and discounted rates of stamp duty are also available to encourage eligible first home buyers to build a residential property.”
The initiative is also expected to provide support for the struggling construction industry with modelling showing the targeted stimulus will translate into the construction of hundreds of new homes, providing a boost for the housing construction industry and generating jobs.
Housing Minister Peter Tinley said about three quarters of Keystart loan approvals were for the construction of a new dwelling so these changes would also stimulate the building industry through new housing supply.
In 2017-18, Keystart approved a total of 2,789 loans, with 2,169 loans for construction or newly constructed homes.
Master Builders WA welcomed the decision and hoped it would see an end to the housing slump.
Executive director John Gelavis said the association had been leading the call for the Keystart changes, which would allow many West Australians to get on the property ladder as well as boosting activity in the new home building sector.
“Master Builders has long recognised the importance of Keystart as a unique pathway to home ownership which has benefits for both buyers and builders,” he said.
“Keystart provides low-deposit home loans to West Australians who can’t meet the requirements of mainstream lenders but the income limits were leaving behind a growing number of people who were earning too much to qualify but still struggled to get bank finance.”
Mr Gelavis said the initiative would bring relief to many of Master Builders’ members who were fighting for survival through a prolonged slump in the new home sector.
Other members of the building industry were also pleased with the announcement.
Easystart Homes sales manager Andrew Black said it was fantastic news for home buyers.
“Now is great time to build; with Perth’s property market in a soft recovery, committing to building a new home now means you will be able to reap huge rewards in 12-18 months’ time when we feel the market will once again be on the upswing,” he said.
“However, the lower barriers will only be temporary, so potential home buyers who are thinking of building are urged to begin the process.”
The Urban Development Institute of Australia (UDIA WA) was more cautious in its response, saying the initiative should only be considered a first step in assisting more potential home buyers into home ownership.
The institute had recommended a 25 per cent increase to the income thresholds in its 2019 State Budget submission and said the changes fell short, equating to 17 per cent for singles, 13 per cent for couples and 15 per cent for families.
Chief executive Tanya Steinbeck said even with the new criteria, options were limited where buyers could find a property under the $480,000 price threshold.
“Out of Perth’s 301 residential suburbs there are just 125 suburbs, or 42 per cent, where the median house price is under the $480,000 limit that is set as the maximum purchase price for a Keystart loan,” she said.
“This limits choice considerably.
“Drilling down further, in the central metropolitan area, Crawley is the only suburb that comes in with a median price under the threshold.”
Ms Steinbeck also expressed concern that the temporary nature of the increases may limit the initiative’s usefulness.
“I am curious to see how many people will benefit, given the time it could take to find a suitable property and then navigate through the finance approvals process,” she said.