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Acknowledging sky-rocketing property prices across Australia, the federal government has revealed new, higher price caps across the First Home Loan Deposit Scheme (FHLDS) and Family Home Guarantee.
The new caps are to “ensure that people can continue to purchase a home as well as accommodate larger families”.
The First Home Loan Deposit Scheme enables first home buyers to purchase property up to a certain threshold with a deposit of just 5 per cent — and a government-backed loan — removing the need to pay lender’s mortgage insurance (LMI).
The latest federal budget also revealed a newer home ownership — the Family Home Guarantee — which provides single parents with the opportunity to purchase a home with as little as a 2 per cent deposit, in much the same way as the FHLDS works.
As at 1 July 2021, property price caps for the First Home Loan Deposit Scheme and Family Home Guarantee will increase.
The changes are outlined in the table below:
|
Region |
FY2020-21 Price Cap
==
==
|
FY2021-22 Price Cap |
||
|
|
Capital City |
Rest of state |
Capital City |
Rest of state |
|
NSW |
$700,000 |
$450,000 |
$800,000 |
$600,000 |
|
VIC |
$600,000 |
$375,000 |
$700,000 |
$500,000 |
|
QLD |
$475,000 |
$400,000 |
$600,000 |
$450,000 |
|
WA |
$400,000 |
$300,000 |
$500,000 |
$400,000 |
|
SA |
$400,000 |
$250,000 |
$500,000 |
$350,000 |
|
TAS |
$400,000 |
$300,000 |
$500,000 |
$400,000 |
|
ACT |
$500,000 |
- |
$500,000 |
- |
|
NT |
$375,000 |
- |
$500,000 |
- |
The capital city price thresholds will also apply to regional centres with a population over 250,000, such as Newcastle and Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and the Sunshine Coast.
The new price caps come as the government hypes the next tranche of its home ownership initiatives, with 30,000 places to become available across the First Home Loan Deposit scheme, the New Home Guarantee program, and the Family Home Guarantee for the upcoming financial year.
Minister for Housing Michael Sukkar said that the new places will assist Australians in achieving home ownership aspirations.
“With the 30,000 new places available from 1 July, now is the time for potential applicants to contact a participating bank or mortgage provider and get their applications underway,” Mr Sukkar said.
“The First Home Loan Deposit Scheme has been a landmark success of the Morrison government since its commencement in 2020. 30,000 first home buyers have been supported into home ownership through First Home Loan Deposit Scheme and New Home Guarantee already.”
The minister expressed that the government knows “how difficult it can be to buy a new home or re-enter the housing market, and that saving a deposit is the hardest part of getting into home ownership”.
He added: “That’s why the Morrison government has established the new Family Home Guarantee, which recognises the challenge of saving for a deposit is that much more difficult when you are a single parent with children.
“By supporting single parents and their children, we are helping them achieve the security and dignity that home ownership provides.
“The Morrison government is helping more first home buyers and single-parent families overcome the challenges of saving for a deposit and realising the Australian dream of owning your own home.”
In response to the release of the 30,000 new places, Real Estate Institute of Australia (REIA) president Adrian Kelly is urging eligible applicants “to contact a participating bank or mortgage provider and get their applications underway”.
“Saving a deposit is the hardest part of getting into home ownership, so the government support will help ease that issue,” he said.
He called out the Family Home Guarantee in particular for being “a life-changing win for women who make up the majority of custodial parents”.
“By supporting single parents, and their children, we are helping them achieve the security and dignity that home ownership provides,” he concluded.
First home buyers needing to save for longer
The announcement’s timing coincides with a new First-Home Buyers Report 2021 from Domain, which found the average couple looking to reside in Sydney will now have to spend seven years and one month saving up for a 20 per cent deposit.
Overall, most capital cities now take couples between two and nine months longer to save a house deposit worth 20 per cent of the average property price.
Lower interest rates and improved mortgage repayments are reportedly behind the “double-edged sword for buyers” — and pushing out the next group of buyers from getting a start on the property ladder.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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