Today’s (31 August 2020) report from the National Housing Finance and Investment Corporation (NFHIC) outlines the intital success of the first release of 10,000 guarantees under the First Home Loan Deposit Scheme.
HIA is pleased to see the findings show the Scheme is providing support in home ownership for first home buyers and overcome the deposit savings trap.
“The time it takes to save a deposit is always a challenge for first home buyers, but today more than ever, combining this with tougher lending restrictions had meant first home buyers were waiting years to achieve their home ownership dream. The fact that 10 per cent of guarantees were provided to buyers over the age of 40 reflects this challenge.
“In this time of COVID-19, choosing to take the step of home ownership is not a decision taken lightly by first home buyers. The confidence they have shown to make this decision in the first half of the year is extremely encouraging.
“HIA has long argued there needs to be a national approach to help first home buyers enter the market and address the time it takes to save for a deposit. The findings from the report confirm HIA’s view that this type of government support provides a significant boost for first home buyers.
“The report asserts the Scheme enabled first home buyers to bring forward their purchase by an average of four years. This means many more young Australians are getting into a home and building their financial future sooner.
“Another important finding is that there has been significant take up amongst lower and middle income earners, including key essential workers like teachers, nurses and emergency services workers. Half of the guarantees were issued to single buyers with taxable incomes of $60,000 to $80,000, while couples were concentrated in the $90,000 to $125,000 income bracket.
“At times of such financial hardship, it is great news for those who are in most need of financial assistance have been able to get receive it.
“Despite the criticism that people are unable to purchase housed in our major cities due to lack of affordable housing, the report shows the major cities still attracted the majority of buyers, with 62.3 per cent buying in these cities and that the average price for those houses was $370,000 for a single and $425,000 a couple.
“One of the unsurprising finding was the large amount of people who were getting into their own detached home. Almost 70 per cent of buyers using the Scheme purchased a detached house, with 25 per cent buying an apartment and 5 per cent purchasing a townhouse.
“Today’s report clearly shows that the First Home Loan Deposit Scheme was the right solution to a real problem. This Scheme provided an almost immediate solution for 10,000 first home buyers and it is hoped the second tranche of 10,000 guarantees, released on 1 July, is just as quickly taken up.
“HIA’s pre-budget submission advocates for an additional allocation of guarantees to address the low uptake by people wanting to purchase a new home. The report shows just 10 per cent of buyers accessed the Scheme to buy a new home.
“HIA has always argued Australians still hold close to their hearts the dream of owning their own home.
“Increasing the number of applicants able to access the Scheme would not only help to boost the economy, but will clearly help lower and middle income workers move into a home of their own much sooner.”