The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
FULL PROGRAM RELEASED FOR URBANITY-25 CONNECTING PROPERTY LEADERS ACROSS THE ASIA PACIFIC
FULL PROGRAM RELEASED FOR URBANITY-25 WHERE THE PROPERTY INDUSTRY CONNECTS
VIEW FULL AGENDADETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
34
print
Print
Real EstateAna NarvaezMon 13 May 19

Will the First Home Buyer Scheme Push Up House Prices?

61b79db9-1cce-435b-9052-0f99d33ac306

The now-bipartisan initiative to provide a leg up for first home buyers saving for a home deposit has been swiftly embraced by the property industry.

Property lobby and interest groups have been quick to support the scheme, which offers a government loan guarantee for first home buyers with a deposit of just 5 per cent.

Economists and property analysts have been less certain, voicing concern that the scheme may inflate house prices and increase the risk of negative equity.

The $500 million scheme, unveiled by the Coalition at its formal bid for re-election on Sunday, will underwrite 15 per cent of the home’s value — allowing first home buyers to more quickly, and easily, meet the 20 per cent deposit requirement.

Modelled on a New Zealand policy, the scheme will be available next year for first home buyers who earn up to $125,000 — or $200,000 for couples.

The scheme will be capped at 10,000 loans annually, which is “pretty small” when compared to the 112,000 loan approvals to first home buyers in 2018, economist Callam Pickering said.

Economist Stephen Koukoulas said the policy would encourage people to take out loans with small deposits.

“There’s a big risk of negative equity,” Koukoulas told the ABC’s Peter Ryan.

“If we were to see this housing decline continue, it adds to the risk of there being negative equity which is, of course, the personal financial poison that caused so many problems in the global financial crisis in the US and UK.”

Related: Negative Gearing Reforms Will Have ‘Little to No Effect’ on House Prices: Treasury

The government will underwrite any shortfall required to meet the 20 per cent deposit on home loans for first home buyers.


Master Builders Australia chief executive Denita Wawn said the plan was a “big win” for first home buyers and the building industry.

The Real Estate Institute of Australia joined the Property Council in welcoming the announcement, saying it will help boost supply.

“The last time the federal government introduced a special measure for first home buyers was during the GFC.

“This measure saw first home buyers, as a percentage of total loans financed, increase from 20.2 per cent in October 2008 to 31.4 per cent in May 2009.”

Managing director of property analyst firm SQM Louis Christopher pointed out that the scheme relies on the cooperation of the banks and financial institutions.

“This scheme has a feeling like a deposit bond and in the past banks have not been welcoming of deposit bonds,” Christopher said.

The banking association released a statement saying it looks forward to “consultation on the details of this policy”.

ResidentialAustraliaFinancePolicyReal EstateSector
AUTHOR
Ana Narvaez
The Urban Developer - Editorial Director
More articles by this author
ADVERTISEMENT
TOP STORIES
Exclusive

Accor Deputy Delivers Verdict on Brisbane Games Hotel Shortfall

Phil Bartsch
6 Min
Qld Budget 2025-26 Brisbane City
Exclusive

Billions Promised, Now Deliver: Industry’s Qld Budget Verdict

Vanessa Croll
6 Min
Medium Density housing in NSW
Exclusive

NSW Budget ‘Groundbreaking’ $1bn Guarantee to Unlock Housing

Leon Della Bosca
7 Min
Exclusive

Azure’s Trent Keirnan on Playing the Long Game

Taryn Paris
5 Min
Exclusive

Private Credit Surge, Skittish Buyers Force Banks to Loosen Presale Rules

Taryn Paris
5 Min
View All >
Not-for-profit BaptistCare is about to embark on one of its biggest projects to date, a 6.4ha development in Sydney’s north west with a capital investment value exceeding $2 billion.
Placemaking

BaptistCare Plans $2bn Precinct at Macquarie Park

Renee McKeown
King William Road City of Unley Corner of Mary Street and King William Road North
Planning

Rezoning Push to Unlock $300m Scheme at SA’s Unley

Leon Della Bosca
Ledlin Developments Somerville Business Park
Industrial

Ledlin Plots $13m Somerville Premium Business Park

Leon Della Bosca
The developer returns to his roots, filing plans for a first-of-its-kind premium business park in his Mornington Peninsu…
LATEST
Not-for-profit BaptistCare is about to embark on one of its biggest projects to date, a 6.4ha development in Sydney’s north west with a capital investment value exceeding $2 billion.
Placemaking

BaptistCare Plans $2bn Precinct at Macquarie Park

Renee McKeown
2 Min
King William Road City of Unley Corner of Mary Street and King William Road North
Planning

Rezoning Push to Unlock $300m Scheme at SA’s Unley

Leon Della Bosca
4 Min
Ledlin Developments Somerville Business Park
Industrial

Ledlin Plots $13m Somerville Premium Business Park

Leon Della Bosca
3 Min
TimePlace Manly shoptop
Construction

Time & Place Plans Second Manly Project as First Begins

Vanessa Croll
2 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/first-home-buyer-scheme-may-push-up-house-prices