MORE eligible first-homebuyers will get chance to enter the property market with the State Government extending its Keystart scheme by $420.9 million.
This could lead to an extra 1100 home loans.
The home building industry will also receive a boost.
Of the 2789 loans approved by Keystart in 2017-18, 2169 were for construction or newly constructed homes – building activity that stimulated the state’s economy by supporting an estimated 1700 jobs and generating up to $670 million in economic activity.
Housing Minister Peter Tinley said at a time when WA housing was more affordable but banks were tightening their lending processes, Keystart reduced financial barriers for West Australians entering the property market.
“First-home buyers engaging a traditional lender generally require a deposit of at least 20 per cent of the property value in order to avoid paying Lenders’ Mortgage Insurance (LMI), but under Keystart the deposit for first-home buyers is as low as 2 per cent of the purchase price,” he said.
“Because Keystart also does not charge LMI, the total upfront costs are substantially lower than those charged by a traditional lender.”
Industry bodies have welcomed the extension to the scheme.
HIA executive director Cath Hart hoped the increase would renew momentum in the WA housing market.
“Increasing Keystart’s funds will help more West Australian’s buy affordable homes and delivers much-needed support for the local residential construction industry,” she said.
“We know that a dollar spent in housing creates $4.85 in extra Gross State Product, so any boost to the housing industry is a genuine boost to the WA economy.”
UDIA WA chief executive Tanya Steinbeck said the institute had been advocating for the expansion of the Keystart service for some time as one aspect to addressing housing affordability issues and allow more first-home buyers to get a foot in the property market door.
“Despite the current property market downturn in WA, first-home buyers have continued to be active in the market with recent figures highlighting that (they) made up 25 per cent of the total finance commitments for housing in WA in 2017-18,” she said.
“As the government has advised, more than one third of all first-home buyers in WA access finance through Keystart, making it an essential tool for getting more people into home ownership who otherwise may struggle to access finance through other institutions such as private lenders.
“Supporting first home buyers and making housing more accessible is critical for the future growth of the state.”
REIWA deputy president Lisa Joyce said the boost to the scheme was a win for WA home buyers and would help more West Australians achieve the dream of home ownership.
“Although housing affordability has improved in WA in the last couple of years, there is still a significant number of West Australians who struggle to save the 20 per cent deposit required by most lenders to purchase a property,” she sad.
“This boost to the scheme will produce another 1100 mortgages in WA which will see more West Australians able to own their own home.”
Both REIWA and UDIA WA would like to see the government do more, including broadening the eligibility criteria by increasing the income limit of Keystart so more people could access the loans.
In order to apply for a Keystart home loan, applicants in the Perth Metro area must be earning under $90,000 if single, $115,000 if in a couple or $135,000 if part of a family.