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GovernmentTed TabetMon 24 Oct 22

Victorian Govt Tips $1.1bn into First Home Buyer Scheme

Government Tips $1.1bn into First Home Buyer Scheme

The Victorian government has announced a $1.1-billion expansion to its shared equity home-buying scheme in a bid to get a further 7000 first-home buyers in to their own homes.

Eligible participants will only need to make a 5 per cent deposit, and the state government will provide up to 25 per cent of the purchase price.

In return, the state government receives a commensurate stake in any capital growth when the property is sold or the applicant buys them out.

The conditions of the scheme are broad and not limited to first home purchases as was the case with the federal scheme. Individuals must earn less than $128,000, or $204,800 for joint applicants.

It applies to homes worth up to $950,000 in Melbourne or Geelong, and $600,000 for the rest of the state.

The announcement by the Andrews government comes ahead of federal Labor’s plan to introduce a similar Help To Buy shared-equity scheme and follows Western Australia’s HomeShare Scheme.

The extension of the fund will be aided by a new lending partner, Indigenous Business Australia, which will be supporting more Aboriginal and Torres Strait Islander participants into the scheme.

Victorian treasurer Tim Pallas is counting on the new investment opening the door of home ownership to a further 7000 people, taking the total to 10,000.

Pallas said it would only ā€œadd to the choices available to families and individualsā€.Ā 

ā€œThe Victorian Homebuyer Fund has been popular for a reason—it helps people get into their own homes quicker with help from a secure partner,ā€ he said.

ā€œThousands more Victorians will now be able to realise their dreams with this new injection.Ā 

ā€œCombined with the First Home Owner Grant and first home buyer stamp duty relief, it can make a massive difference.ā€

The typical Victorian Homebuyer Fund member to date has paid an average deposit of $35,000 on a property purchase price of around $650,000, with the fund contributing shared equity of $155,000.

The fund was launched in October last year, and Victoria is working co-operatively with the federal government as it prepares its Help To Buy shared-equity scheme, which will add to the choices available to families and individuals.

Harley Bougoure-Latchford
ā–² Melbourne couple Harley Bougoure-Latchford and Samruai Raikuea. Image: Supplied

Melbourne couple Harley Bougoure-Latchford and Samruai Raikuea credited the fund for helping them realise their homeownership ambitions, recently settling on their $901,000 home in the south-eastern suburb of Skye.

The couple paid a 9.5 per cent deposit and benefited from a $225,250 Homebuyer Fund equity contribution.Ā 

Because of the fund’s contribution, they did not pay lenders mortgage insurance, saving about $28,000.

ā€œIt’s our first home that we purchased—without the scheme, it wouldn’t have been possible for us,ā€ Bougoure-Latchford said.

ā€œWe’ve got a pretty busy schedule with two full-time workers and kids’ schooling – the house came ready to go, nice and modern, with a backyard for the kids.ā€

Victoria’s first home buyer cohort has shrunk to its lowest numbers in three years, as rising interest rates bite the more affordable end of the property market.

New loans to first home buyers in Victoria fell to their lowest level since April 2019—when the market was last in a downturn—in July, and has continued to remain subdued in August—the latest month for which Australian Bureau of Statistics figures are available.

Since May, the cash rate has risen six times to 2.35 per cent from a record low of 0.1 per cent, and more rises are on the horizon. The price of a typical entry-level house has fluctuated this year but is up by almost $120,000 since March 2020.

ResidentialAustraliaPolicyPolicy
AUTHOR
Ted Tabet
The Urban Developer - Journalist
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Article originally posted at: https://www.theurbandeveloper.com/articles/victorian-government-homebuyer-fund-announcement