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Government assistance and flexible lending policies could be the key to helping new borrowers enter the market.
The Australian Council of Trade Unions will make a submission to the Fair Work Commission tomorrow for an increase in the minimum wage so workers can afford to buy homes.
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ACTU secretary Dave Oliver sees home ownership now as a “pipe dream” for low-income earners.
“The minimum wage has less than doubled in the past 20 years compared to a 250 per cent increase in housing prices,” Mr Oliver said.
“Someone on a minimum wage of $622 per week has enough to cover their basic costs and that’s about it. These workers tell us it’s impossible to save up a deposit, let alone afford the weekly repayments.”
Glenavon Finance owner David Young said he was concerned that rising property prices were making it hard for some people to buy a home.
He told The Adviser the government needs to reduce stamp duty and spur competition among LMI providers to reduce insurance prices.
Gary Tolliday from Gary Tolliday Finance also said he was concerned by rising prices.
He called on the government to back first home buyers with financial assistance and added that lenders need to offer higher LVR loans.
Blended Home Loans director Grant Hocknell said lenders could help low-income earners by being more flexible with their products.
He offered support for the South Australian government-backed HomeStart loans scheme, which he said doesn’t always force borrowers to make higher payments when interest rates rise.
Mortgage Choice Newtown principal Suzanne Taylor said it was not so much low incomes that were keeping people out of the market but the challenge of raising a deposit.
She told The Adviser that borrowers could get around the problem by partnering with other people on property purchases.
