The Albanese Government has just announced a gamechanging new program to help first home buyers all over Australia. The government will invest $10 billion to construct 100,000 new homes exclusively for individuals entering the property market for the first time. This ambitious new plan would allow a much larger program limited by income. It broadens the program’s appeal by making it available to everyone, while directly addressing the urgent and severe housing crisis that is impacting millions of Australians.
This program provides a helping hand to first home buyers, allowing them to buy a home with only a 5 percent deposit. It slashes the typical 20 percent cost hurdle that so many face when attempting to storm the market. The federal government is doing something to mitigate the high cost of Lenders Mortgage Insurance (LMI). To the typical buyer, LMI can increase their costs by an average of $23,000.
Significant Investment and Expansion
The Albanese Government’s commitment to housing will increase its existing investment from $33 billion to $43 billion, marking it as the largest housing investment in Australia’s modern history. The government expects that this expansion will see almost 80,000 Australians using the income-capped version of the scheme.
Prime Minister Anthony Albanese emphasized the importance of this initiative, stating, “When a young person saves a 5 per cent deposit, my government will guarantee the rest with their bank.” The government provides this guarantee to get more Australians into their own homes. It’s intended to help people who have historically been excluded from the housing market.
The other significant change is a substantial increase to the price caps on properties that can be eligible under the scheme. This amendment extends the eligibility for first home buyers in expensive markets such as Sydney and Melbourne, New South Wales. They are able to afford a larger variety of homes. Sydneysiders can afford to purchase their first home worth $1.5 million with a $75,000 deposit. Prospective homebuyers in Queensland need only afford a $850,000 home with a $42,500 deposit.
Addressing the Housing Crisis
In her speech on the new initiative, Housing Minister Clare O’Neil spoke to the chronic problem of housing affordability. “We’ve got a housing crisis in the country that’s been a generation in the making,” she stated, highlighting the urgency and necessity of addressing this critical issue. Today the Federal Government is announcing a new approach to ensure more Australians have affordable housing choices. To fulfill their mission of opening the door to safe more home ownership.
It means that production of the 100,000 homes won’t really get underway until 2026-27. Owners should be able to plan on being able to move in beginning with the next fiscal year. This timeline is very encouraging and indicative of the government’s determination to make real and meaningful progress in addressing this pervasive housing crisis.
Guaranteed Support for Buyers
Instead, under this new scheme, the government will guarantee up to 15 percent of the value of a loan. This change pretty much does away with the necessity for Lenders Mortgage Insurance (LMI). This positive step will provide meaningful relief to millions of first time home buyers. They’ve been unsuccessfully jumping through all sorts of financial hoops just to be able to get a mortgage.
The complete offset will be accessible to those with incomes from $48,000 to $104,000. This intentional targeting by income levels is designed to help a wide range of future homebuyers. More importantly, it equips them to understand the chaos that comes with buying their first home.
