First home scheme helps young buyers
First homebuyers are being helped onto the property ladder sooner with a government incentive allowing them to pay a house deposit of just five per cent.
The Federal Government's popular First Home Loan Deposit Scheme is open to 10,000 eligible first homebuyers.
To be eligible, singles must have a taxable income of less than $125,000, while couples must have earnt no more than $200,000 in the last financial year.
Needing only a five per cent deposit, the Government acts as a guarantor for the remaining 15 per cent and purchasers also avoid the hefty lenders' mortgage insurance.
Despite the coronavirus pandemic, there has been increased activity from first homebuyers in the first half of this year, according to the National Housing Finance and Investment Corporation - and it's set to continue.
According to realestate.com.au chief economist Nerida Conisbee, there's been an uptick in inquiries due to the incentive.
"It's an enormously popular scheme. We're seen inquiry levels double and triple, mostly in Canberra and Perth," she told news.com.au.
Applicants are mainly in the 25-34 age bracket earning between $60,000 and $80,000 for singles and between $90,000 and $125,000 for couples, and are buying homes for around $370,000 to $425,000.
With the market slowing and investors backing away, there's more room for Millennials to enter the market.
"Investors were more active a couple of years ago and it was seen as unfair that incentives were given to investors first. First homebuyers would go to an auction and be up against investors so it felt very lopsided. This scheme helps to balance it out and helps first homebuyers."
Ms Conisbee added that with investor activity declining, there's a boost in inner city apartment listings.
"A lot of inner city apartments are being sold because they can't find tenants, so it's important to be aware of that, but it's great if you want to live in the inner city," she said. "We've also seeing growth in new house and land packages because you also get the HomeBuilder incentive."
The state government incentives are also pushing the drive, she added, such as with the NSW Government extending its cut-off for stamp duty.
"Millennials may not be able to get their dream home right now but they can get into the market. Getting into the market is really important," Ms Conisbee said. "The sooner you get your foot in the door, the better position it puts you in. Getting the deposit is a big help to get into the market."
Last year about 70 per cent of all applicants purchased a detached house and a majority were aged between 18 and 34.
Originally published as First home scheme helps young buyers