Federal Budget 2023: New Help For more First Home Buyers
May 24, 2023
Earlier this month, the Federal Budget announced a major shift: the Home Guarantee Scheme is expanding to allow more people to vie for the 50,000 available spots. Now, more individuals will have access to the 15% government loan guarantee, meaning that accumulating a 5% deposit gets them a bank home loan without needing mortgage insurance.
Here are the key changes that come into effect from July 1.
The Scheme has three facets: The First Home Guarantee (available to single, married, or de facto couples purchasing their first home in any location), the Regional First Home Buyer Guarantee (exclusively for regional areas), and the Family Home Guarantee (strictly for single biological or adoptive parents).
- Friends, siblings, and other family members can now jointly apply for the First Home Guarantee and the Regional First Home Buyer Guarantee. Moreover, non-first home buyers who haven’t owned a home in Australia for 10 years can also apply.
- Single legal guardians, such as an uncle, aunt, or grandparent, can now apply for the Family Home Guarantee.
- Permanent residents from overseas can now apply for any facet of the scheme, expanding beyond the previous restriction to Australian citizens only.
This change is timely, given the significant decrease in first-time home buying. Data from the Australian Bureau of Statistics shows a 57% drop in new first home loans and a 45% decrease in ‘rentvestor’ loans nationwide from January 2021 to February 2023.
Then there’s the impact of 11 interest rate hikes. It’s no surprise that affordability has once again become a concern.
We’ve noticed more renters looking to buy as securing long-term rentals has become increasingly challenging, and soaring weekly rents make home buying a more viable option.
Therefore, these adjustments should offer more prospective home buyers an opportunity. And it shouldn’t cost taxpayers anything more, either.
The number of places available under the Scheme remains the same – only the eligibility criteria have changed.
There are 35,000 spots annually under the First Home Guarantee, 10,000 each year until 30 June 2025 under the Regional First Home Buyer Guarantee, and 5,000 each year until the same date under the Family Home Guarantee.
Now is a great time to buy, more signs are pointing to us either hitting the bottom or just past it. New CoreLogic data shows Australian home values rising for the second consecutive month in April.
Typically, real estate cycle corrections last around 18 months, with prices dropping 8%-10% from the highest to the lowest point. That’s about where we are now, with values down 9.1%, according to CoreLogic.
If you’re hoping to enter the market, prices might not be falling, but with tamed inflation, relief on the interest rate front might be just around the corner.