Regional home guarantee set to make a ‘real difference’

The Morrison government said it will expand the First Home Guarantee Scheme to 35,000 (up from 10,000), provide 10,000 places for a new Regional Home Guarantee and expand the Family Home Guarantee to 5,000 guarantees each year.

While the details will come to light tonight (7:30 PM, 29 March), the Housing Industry Association said an extension to the first home guarantee was a great step to help combat housing affordability and supply issues.

“The first home loan deposit scheme has clearly proven its value over the last three years, helping more than 30,000 households buy their first home,” said HIA managing director, Graham Wolfe.

“The extension of the first home loan deposit scheme and the new home guarantee scheme will make a real difference in the lives of thousands of Australians looking to achieve home ownership over the next three years.”

The first home guarantee allows home buyers to purchase a new or existing home with a deposit as low as 5 per cent without lender’s mortgage insurance, because the government guarantees the loan.

New Regional Home Guarantee 

The government will also provide up to 10,000 places each year under a new Regional Home Guarantee, set to support home buyers (including non-first) and permanent residents to purchase or construct a new home in regional areas.

Mr Wolfe said extending the scheme to people who have previously owned a home will support the “missing middle” home seekers – those who have been out of the market, most likely renting, for more than five years in regional Australia.

“Many people each year can find themselves back in the rental market after selling their home. The reasons vary but once in the rental market, saving a deposit to buy a new home can be just as big a hurdle as it is for first home buyers,” Mr Wolfe said. 

“Until now, there has been nothing available to help these people re-enter the housing market. The introduction of the Regional Home Guarantee has the potential to help these home buyers but also to boost home building in the regions.

“Many people have chosen to move to regional areas over the last two years to build a new life, placing pressure on housing affordability in these areas. Supporting home building at the same time as supporting people re-enter the housing market can make a real difference.”

Family Home Guarantee

In addition 5,000 guarantees will be issued to expand the family home guarantee, from 1 July 2022 to 30 June 2025.

The single parent family housing scheme supports eligible single parents with children to buy their first home or to re-enter the housing market with a deposit of as little as 2 per cent.

Since its inception almost 60,000 Australians have been supported by Home Guarantee Schemes, with a focus on women and frontline workers.

The government said of total guarantees issued, 52 per cent went to women, well above the market average of 41 per cent women, while 85 per cent of Family Home Guarantees were taken up by single mums.

The schemes can only be used on homes under a certain price guide outlined by the government and a person is eligible if they earn no more than $125,000 a year and $200,000 for couples.

*TABLE: The federal government's first home loan deposit scheme and family home guarantee property price cap from 1 July 2021, as well as the Labor government's proposed regional property price caps under it Regional First Home Buyer Support Scheme. 

The home guarantee schemes will be available to people who are buying a home which is below the thresholds listed above, however, both government's indicate a review in six months. 

Opposition Leader Anthony Albanese, if elected into power at the upcoming federal election, has pitched a housing deposit scheme for regional Australians targeting first home buyers. 

Under Labor’s proposed Regional First Home Buyer Support Scheme, there would be 10,000 places a year for families in regional areas and eligible buyers would be able to purchase a house with a deposit as low as 5 per cent, without needing to pay lender’s mortgage insurance.

First home borrowers sees drop

The Real Estate Institute of Australia president Hayden Groves said with household budgets under pressure in 2022, home ownership is one of the pathways to reduce hip pocket challenges.

“First home buyers purchasing in New South Wales in 2016 were paying less than median rent in under five years, in South Australia under four years, in Tasmania nine months, the NT four and a half years and in the ACT around two years,” Mr Groves said.

“Access to the market for first home buyers was at its best in June 2009, when 48.2 per cent of all new loans were from first home buyers.

“In contrast, in March 2004 only 21.8 per cent of new loans were from first home buyers. By December 2021 first home buyers made up 34.1 per cent of all new housing loans.”

Mr Groves said the federal government schemes will put Australians “one step closer” to owning their own home.

[Related: HIA recommends first home loan deposit extension]