Anthony Albanese’s 5 per cent deposit scheme for first-home buyers is fuelling demand for cheaper homes
Labor’s new 5 per cent deposit scheme for all first-home buyers regardless of income is fuelling demand for cheaper homes and worsening Australia’s housing affordability crisis, new data shows.
Prime Minister Anthony Albanese’s signature election policy, allowing all property newcomers to buy a home with a small deposit, was fast tracked to October 1, from an earlier planned start date of January 1 this year.
Since then, demand has soared for more affordable homes, new Cotality data showed, with first-home buyers now able to get into the market with a 5 per cent deposit, instead of the usual 20 per cent mortgage deposit, and avoid having to pay costly lenders mortgage insurance.
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By continuing you agree to our Terms and Privacy Policy.“The expanded 5 per cent deposit guarantee has sharpened demand at lower price points, with under-cap markets outperforming across almost nine-in-ten regions,” Cotality research director Tim Lawless said.
“We’re seeing a clear shift in momentum, with buyers increasingly targeting homes that fall under the new price caps — especially in Sydney, where the value gap is most pronounced.”
Prices for homes under the scheme cap soared at a faster pace than properties above the cap in every capital city market, except Canberra, during the December quarter covering October 1 to December 31.
“This trend was already visible before the scheme’s official start on October 1, suggesting some buyers acted early to secure properties before competition increased,” Mr Lawless said.
Sydney home prices under the scheme’s $1.5 million cap climbed by 2.3 per cent over three months, as prices over that cap fell by 0.1 per cent. Sydney’s median house price stood at $1.588 million on December 31, Cotality data showed.
In Brisbane, home prices under the $1 million cap soared by 6.5 per cent, compared with 5 per cent above that cap, in a market where $1.131 million is now the mid-point house price.
Perth homes under the $850,000 cap soared by an astounding 8.4 per cent over just three months, compared with 7.3 per cent above that cap, in a market with a median house price of $983,068 and now more expensive than much bigger Melbourne.
In Adelaide, homes under the $900,000 cap soared by 5.6 per cent compared with 4.8 per cent under the cap, in a market with a mid-point house price of $960,501.
Melbourne properties below the scheme’s $950,000 cap saw a 1.4 per cent increase compared with a 0.3 per cent rise above the cap in a city, with a median house price of $981,165.
In Hobart, homes under the $700,000 cap went up by 4.6 per cent compared with 2.9 per cent under the cap in a market with a middle house price of $768,376.
Darwin saw a 6.1 per cent increase for homes under the $600,000 cap compared with a 5.1 per cent rise above that cap in a market with a median home price of $697,251.
The exception was Canberra where prices for homes over the scheme’s $1 million cap rose by 2.6 per cent as those under the cap increased by a lesser 1.9 per cent. The national capital has a median house price of $1.041 million.
Last year, capital city house prices climbed by 9.1 per cent to $1.127 million, following three Reserve Bank of Australia interest rate cuts in February, May and August.
Values for a home with a backyard soared by more than double the pace of wages, making it harder for young Australians to get into the property market.
From February 1, the banking regulator will be requiring lenders to restrict the proportion of loans, with debt-to-income ratios of six or more, to no more than 20 per cent of their loan book.
