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Victorian broker Matt Turner welcomes the government’s announcement to raise the price caps for Home Guarantee, but warns some regions will miss out.
It comes after Prime Minister Scott Morrison declared higher maximum property prices will come into force for new buyers under the government’s Home Guarantee Scheme.
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Tens of thousands more consumers are expected to benefit from the new property price caps under the Home Guarantee Scheme from 1 July.
The new price caps will increase by $100,000, with regional Victoria and NSW seeing a rise of $150,000, following record property price rises in regional areas.
For example, Victoria’s capital and regional centres increased from $700,000 to $800,000, whereas the rest of the state went up from $500,000 to $650,000.
Broker Matt Turner at GSC Finance Solutions in Geelong said $650,000 may still be “a little tight” for a “good quality family home” in some regions.
“We have seen a massive boom in house prices, to the point where first home buyers were struggling to find an established property within the price caps,” Mr Turner said.
He said the increase was a “step in the right direction” and will give clients a new price point to aim at, which will open suburbs that may have otherwise been unaffordable.
But he said, the issue of rising housing affordability remains a concern.
“I do question whether this is treating the symptoms of housing affordability rather than looking at the broader issue of housing affordability,” Mr Turner said.
“While I think the increase in price cap is a necessary step, it does mean first home buyers will be lending more than ever to enter the property market and will be the most exposed when rates begin to rise.”
Home Guarantee extended
The government had also established a new guarantee scheme specifically for regional buyers in the budget, to add to its existing programs for first home buyers and single-parent families.
The First Home Guarantee and Regional Home Guarantee schemes allow eligible buyers to purchase a home with a deposit as small as 5 per cent, while the government guarantees up to 15 per cent of the property price – allowing the buyer to skip lender’s mortgage insurance.
The Family Home Guarantee on the other hand allows single parents with dependent children to purchase homes with a deposit as small as 2 per cent.
Mr Morrison commented the Home Guarantee Scheme had already assisted 60,000 Aussies to home ownership.
“Saving to buy a house has always been hard work and we know as prices have increased it’s been getting harder,” he said.
“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.”
The new price caps across states will now apply during the 2022-23 financial year:
- NSW
Capital city and regional centres – $900,000 from $800,000 before
Rest of state – $750,000 from $600,000 before - Victoria
Capital city and regional centres – $800,000 from $700,000 before
Rest of state – $650,000 from $500,000 before - Qld
Capital city and regional centres – $700,000 from $600,000 before
Rest of state – $550,000 from $450,000 before - WA
Capital city and regional centres – $600,000 from $500,000 before
Rest of state – $450,000 from $400,000 before - SA
Capital city and regional centres – $600,000 from $500,000 before
Rest of state – $450,000 from $350,000 before - Tasmania
Capital city and regional centres – $600,000 from $500,000 before
Rest of state - $450,000 from $400,000 before - ACT
Capital city and regional centres – $750,000 from $500,000 before - NT
Capital city and regional centres – $600,000 from $500,000 before - Jervis Bay Territory and Norfolk Island; and Christmas Island and Cocos (Keeling) Islands have seen no changes, with their respective caps remaining at $550,000 and $400,000
The capital city price thresholds apply to regional centres with a population over 250,000 – including Newcastle and Lake Macquarie, Illawarra (Wollongong); Geelong; Gold Coast and Sunshine Coast.
Assistant Treasurer and Minister for Housing Michael Sukkar revealed the government had been encouraged to make the move by current guarantee users making larger repayments than needed.
“Because 41 per cent of scheme-backed loans are ahead of their pay back schedule, we are confident these adjusted price caps strike the right balance,” he said.
“We acknowledge how hard it can be to buy a new home or re-enter the housing market and that saving a deposit is the hardest part of getting into home ownership. By adjusting the price caps for the Home Guarantee Scheme, we are ensuring Australians have more options when buying a home.”
Shadow minister for housing and homelessness Jason Clare said it was “obvious” the existing price caps are too low.
“House prices have skyrocketed in the last year and these caps haven’t kept up,” Mr Clare said.
“That’s why we have called for the government to increase them and why we have already promised to review and increase them immediately if we win the election.”
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