FHLDS grants four-year head start to FHBs

The National Housing Finance and Investment Corporation (NHFIC) has published its inaugural First Home Loan Deposit Scheme Trends & Insights report, which contains key findings from the first phase of the program – the six months to 30 June 2020.

Among the key insights outlined in the report was that, on average, FHLDS participants without alternative financial means (i.e. those who would have otherwise required a 20 per cent deposit to purchase a home) advanced their home ownership goals by four years.

Reflecting on the NHFIC data, Minister for Housing and Assistant Treasurer Michael Sukkar said the scheme had successfully achieved its objective of easing housing affordability pressures for aspiring FHBs.

“The Morrison government is committed to doing all we can to help Australians get into a home of their own sooner,” he said.

This comes amid findings from a Gateway Bank survey of FHBs, which found that 68 per cent of respondents have delayed their plans to enter the property market in response to the economic impact of the COVID-19 pandemic.  

According to the Gateway research, approximately half (50 per cent) of respondents have dipped into their deposit savings since the onset of the crisis, 16 per cent of which have exhausted more than half of their deposit.

As a result, more than half (56 per cent) of such respondents now expect saving for a deposit to take an additional one to three years, while a quarter (25 per cent) said they’ll require at least an additional three years to fulfil their home ownership ambitions.

FHLDS breakdown

Of the 10,000 FHLDS participants – representing one in eight FHBs over the period – almost 70 per cent purchased a detached house, roughly 25 per cent purchased an apartment, and 5 per cent purchased a townhouse.

However, the median purchase price for apartments ($475,000) exceeded houses ($385,000), with the vast majority (82.6 per cent) of apartment purchases in the major capitals, compared with 54.1 per cent of houses.

In total, 62.3 per cent of FHLDS participants purchased a home in a major capital, while 37.7 per cent purchased a property in a regional location.

According to the NHFIC, on average, more than half of all homes purchased in capital cities were between 15 and 30 kilometres from the central business district, with couples more likely to purchase a property further away from the capital.

FHBs moved an average of 7.6 kilometres from their existing residence, with Victorian FHBs moving the greatest distance (10.4 kilometres).

Half of all FHLDS placements were issued to single applicants with a taxable income of $60,000 to $80,000, with most couple applicants on a taxable income of between $90,000 to $125,000.

Key workers (emergency services professionals, teachers etc) represented 18 per cent of all FHLDS placements (1,800), with teachers the largest cohort (37 percent), followed by nurses (25 per cent).

As of 30 June, approximately 54 per cent of all scheme placements have settled, 13.4 per cent had signed contracts to purchase a home, and 32 per cent had been pre-approved and were looking to buy a property.

Commenting on the findings, NHFIC CEO Nathan Dal Bon said: “Demand for the scheme in the six months to 30 June continued despite the onset of the COVID-19 pandemic.  

“First-time buyers across age and income spectrums around the country accessed the scheme, and we saw strong interest from buyers in outer metropolitan and regional areas.”

The NHFIC is set to provide an annual update on the operation of the scheme following the end of each financial year.

[Related: Red tape squeezing FHBs out of market]