The federal government will lift the price caps on its Home Guarantee Scheme in a bid to support more buyers getting onto the property ladder.
The Home Guarantee Scheme announced in March allows buyers with a deposit as low as 5 per cent to apply for the program, with the remaining 15 per cent of the deposit guaranteed by the government. A total of 50,000 places are available each year for three years under the scheme.
The program includes the First Home Guarantee – previously known as the First Home Loan Deposit Scheme – the Regional Home Guarantee and the Family Home Guarantee.
To be eligible for the scheme, a single applicant should earn no more than $125,000 per year or $200,000 for couples.
While the refreshed scheme was welcomed by the industry, concerns were raised regarding the lack of adjustment to the price cap under the Family Home Guarantee and the First Home Guarantee program.
In Canberra, that price cap was $500,000 for any type of property, new or existing, despite the capital’s booming property market.
On Sunday, Prime Minister Scott Morrison lifted the cap to $750,000 for the capital, the largest increase in the scheme. Sydney also saw its price cap increase from $800,000 to $900,000 and Melbourne from $700,000 to $800,000. This will come into effect from July 1.
“People are cutting years off the time they’d need to save a deposit for a home because of this program. Now even more Australians can get into a home sooner,” Mr Morrison said.
“Saving to buy a house has always been hard work and we know as prices have increased it’s been getting harder.
“That’s why these higher price caps will help more people realise their dreams and lock in a stronger future for themselves.”
ACT real estate lobby group REIACT chief executive Michelle Tynan said the increased price cap was “terrific news for Canberrans but it all comes back to supply”.
“It’s wonderful news for first-home buyers and hopefully when the new government comes to fruition, be it the existing or the Opposition, they may look at mandating some state and territory requirements to enable a faster release of land and that’s not just us, that’s every state and territory,” she said.
Real estate agent Jonny Warren also welcomed the news but warned that the increased price cap will push dwelling prices higher.
The latest Domain House Price Report showed that the median dwelling price in the city is $954,971.
“It’ll definitely bring more first-home buyers into the property market and will only spur more competition and will push property prices even further,” he said.
However, Mr Warren added that many first-home buyers he’d spoken with have had a larger budget to spend.
“Believe it or not, there’s a lot of first-home buyers who have upwards of $800,000 to spend … so they’ve missed out on these incentives,” he said.
“The entry price for these buyers has only been pushed upwards in recent years and I imagine with these new price caps, it’ll only incite more activity in the marketplace.”