A pre-election promise by the Liberal’s will see first home buyers able to get into the market sooner than before.

The main features of the policy include:

•  Reduce the deposit required to 5% of the purchase price
•  Savings of approx. $10,000 in relation to mortgage lenders insurance
•  A boost in competition with small lenders to be prioritised 

The First Home Loan Deposit Scheme will commence on 1 January 2020 and will be available to people who earn less than $125,000 annually, or $200,000 for couples. The value of homes that can be purchased will vary from different regions. 

The Real Estate Institute of Australia (REIQ) supports the initiative, with REIQ CEO Antonia Mercorella indicating the approach for this segment of the market is the right one.

“The initiative offers help in a meaningful way to those seeking to get their foot in the door of their first home and doesn’t cause detriment to other sectors of the market. This is a policy that was drafted with the many moving parts of the property market in mind,” Ms Mercorella said.

The Finance Brokers Association of Australia (FBAA) has also welcomed the policy. 

“Brokers welcome the First Home Loan Deposit Scheme and other policies aimed at giving the property sector a boost. We will certainly do our part to boost competition and be ready to assist when the policy comes into play in January next year,” said FBAA managing director Peter White.

With every government policy, there are some that oppose. The ABC reported that some economists predict the scheme could be ‘irrelevant’ and ‘ineffective.’ The initiative is capped at 10,000 borrowers.

Hannah Schuhmann anticipates this new initiative will increase interest in CBD apartments – an affordable option where buyers can get great value for money. Currently, there are a range of units available from $300,000 - $500,000 which occupy key CBD locations.