First home buyers in Australia will soon have the opportunity to enter the property market with a lower deposit requirement, as the federal government has announced an earlier rollout of its deposit scheme. Starting in October 2023, eligible buyers can secure their first home with a deposit as low as five per cent, three months ahead of the original launch date set for January 2026.
This initiative marks a significant expansion of the deposit scheme, which previously imposed a cap on the number of participants each year. Under the new guidelines, the government will act as a guarantor, contributing the remaining 15 per cent of the deposit. This arrangement aims to alleviate the burden of costly lenders mortgage insurance, making home ownership more accessible.
Government Aims to Support First Home Buyers
Prime Minister Anthony Albanese emphasized the importance of this scheme in helping young Australians achieve their home ownership dreams sooner. “We want to help young people and first home buyers achieve the dream of home ownership sooner,” he stated. “Bringing the start date of our five per cent deposit scheme will do just that, getting more Australians into their home quicker, while saving money along the way.”
In addition to the earlier start date, the government has revised property caps for eligible homes across almost all jurisdictions. For instance, a first home buyer aiming to purchase a property at the national median price of $844,000 would only need a deposit of $42,200. In Sydney, where property values are significantly higher, a deposit of $75,000 would be required for the maximum property value of $1.5 million.
It is estimated that approximately 70,000 people will benefit from the home guarantee scheme within its first year of expanded access, an increase of 20,000 from the current yearly cap. Housing Minister Clare O’Neil expressed her confidence in the scheme’s potential to foster equity in home ownership. “The Albanese Labor government is stepping up to level the playing field and back a new generation of first home buyers into the housing market,” she noted.
Broader Implications for Housing Market
The announcement comes as the government pauses upcoming changes to the national construction code, aiming to expedite building processes. The code will remain on hold until 2029 with the exception of essential safety standards. This decision follows a productivity roundtable hosted by the federal government, which also led to the fast-tracking of environmental approvals for over 26,000 homes.
Albanese’s administration is focused on addressing the housing crisis and supporting potential home buyers who have faced extensive challenges in recent years. Many young Australians have found themselves locked out of the housing market, often saving for decades while contributing to someone else’s mortgage. The government’s commitment to facilitating access to home ownership reflects a significant shift towards supporting future generations in achieving their housing goals.
