First home buyer advocates are pushing for Victoria’s new shared ownership scheme to be expanded nationally.
From January 2018, 400 lucky Victorian singles or couples will be able to split the price of a new home with the state government.
The $50 million project, called ‘HomesVic‘, will be aimed at Victorian couples earning less than $95,000 or singles under $75,000 who qualify for a bank loan but don’t have enough savings for a deposit.
Crucially, they will only need to pay a 5 per cent deposit — saving them tens of thousands of dollars up front.
Participants in the trial will be able to buy existing or new dwellings. The state government will take an equity share of up to 25 per cent, and will recoup this percentage when the buyers eventually sell.
In a statement issued to The New Daily, Victorian Treasurer Tim Pallas said the measure would lower the cost of deposits as well as ongoing loan repayments.
“This pilot scheme will make it easier for first home buyers to get their foot in the door, as well as reducing the size of the loan they’ll need to service,” Mr Pallas said.
“Not only do first home buyers deserve a chance to enter the market, but they also deserve more choice about where they live.”
The measure is part of the Labor state government’s new housing affordability package, which also included scrapping stamp duty for home purchases under $600,000 for first home buyers, and a new tax on landlords who refuse to rent out their investment properties.
In addition to ‘HomesVic’, the Andrews government will also set aside $5 million for a similar co-ownership scheme called ‘Buy Assist to Victoria’, which will involve a private sector model based on partnerships with developers, rather than the state government directly.
Daniel Cohen said his advocacy group, First Home Buyers Australia, are “big fans” of the proposal, which he said should be rolled out nationally.
“Overall, we like it. We think it’s a good initiative and we like that it’s targeted at low income earners — the ones who are struggling to put a deposit together,” Mr Cohen told The New Daily.
“The deposit really is the hardest part.”
Shared equity schemes already exist in Western Australia (‘Keystart’) and South Australia (‘HomeStart’). The most similar to Victoria’s appears to be SA’s Breakthrough Loan.
Figures released last year show that these two states have the highest owner occupier rates in the nation (although it must be noted that prices are much lower in WA and SA compared to Victoria and NSW).
In a statement to The New Daily, HomeStart CEO John Oliver called on other states to copy its successful model of a government-owned home loan provider.
HomeStart has helped one-in-8 first home buyers into home ownership in South Australia since it was created in 1989, and in 2015-16 saw a 17.5 per cent rise in home loans, with almost 47 per cent of loans going to first home buyers.
“The reality is that many households, particularly those with double incomes, are able to service monthly home loan repayments but in many cases they don’t have the deposit required to overcome the first hurdle,” Mr Oliver said.
In addition to requiring lower deposits and shared equity, as Victoria will, South Australia’s ‘HomeStart’ also accepts rental history as a form of savings.
Federal Treasurer Scott Morrison praised the Victorian government for having a “good crack” at trying to ease housing affordability pressures, but joined other experts in warning that extra cash for first time buyers may actually push up prices.