Australian First Home Buyer Scheme Expanded With Bipartisan Support

A "sold" real estate sign is seen outside a high-rise apartment block in the suburb Kirribilli in Sydney, Australia, on May 8, 2021. (Lisa Maree Williams/Getty Images)

The Australian federal government announced that tens of thousands more citizens would be able to buy a house under its expanded Home Guarantee Scheme.

The scheme’s property price caps have been increased across all states and territories and the number of available guarantees has also been increased to a total of 50,000 places a year from July 1.

Under the scheme, the government will guarantee up to 15 percent of a mortgage, meaning first-home buyers only need to put forward a five percent deposit to purchase a home.

“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,” Prime Minister Scott Morrison said. “Saving to buy a house has always been hard work and we know as prices have increased it’s been getting harder.

The price cap for Sydney, which has the country’s highest median house price at $1.6 million, has been increased to $900,000, while Melbourne’s has been increased to $800,000.

The Australian property market grew over 22 percent in 2021, putting homeownership dreams out of reach for many Australians. However, the market has shown visible signs of slowing, with Sydney witnessing its first price fall in 17 months in March.

Morrison said the scheme had already assisted 60,000 Australians on their path to homeownership.

Housing Minister Michael Sukkar said 41 percent of scheme-backed loans were ahead of their payment schedule, so the government was confident that the newly adjusted price caps “strike the right balance.”

Borrowers still need to meet their financial institution’s usual loan repayment assessment to participate in the scheme to ensure home buyers don’t enter a loan arrangement that could result in significant financial hardship.

The scheme is also backed by the opposition party, with Shadow Treasurer Jim Chalmers saying Labor was supportive of the plan to increase price caps.

“And we’ve said for some time that we don’t think the caps are appropriate. So, to the extent that the caps are being changed today, we welcome that,” he told reporters. “We’ve also got our policy around social and affordable housing. And we'll have more to say on housing between now and the election.”

The government’s scheme also includes 10,000 guarantees for homebuyers in regional areas, a policy similar to the opposition party, which states that 10,000 first-home buyers in regional Australia would be eligible to receive a guarantee of up to 15 percent.

Price caps for the Labor party are also exactly the same as prior to the Liberal Coalition’s price cap increase.

Chalmers previously called the government’s scheme a “carbon copy” of Labor’s plans.

“That’s a good thing, that’s welcome, that they want to implement our policy,” Chalmers told the ABC in March.

However, Sukkar called it a “major expansion” of the scheme that has been in place since 2020.