The Incentives Putting Home Ownership in Reach
With the rollout of the 2021 financial year, buying a home will finally become a reality for tens of thousands of first home buyers and single parents across the country.
The First Home Loan Deposit Scheme and the Family Home Guarantee are aimed at helping first-time buyers and single parents with children get a leg in the door of the real estate market, as property prices continue to soar.
With the introduction of a deposit as little as 2%, many Aussies who have been struggling to save enough money for a deposit will now be able to realize their dream of owning their very own home.
If you’re looking to build or buy a new home, or renovate an existing property, now might be the perfect time to get the ball rolling. With interest rates at record lows and government incentives high, there’s never been a time like right now!
So, let’s take a closer look at each scheme and how it will help ordinary Australians reach their home ownership goals:
First Home Loan Deposit Scheme
Under the 2021 – 22 Federal Budget the Australian government has announced the extension of the FHLDS (First Home Loan Deposit Scheme). 20,000 places have been allocated across 2021/22 to encourage first-home buyers to enter the property market.
Eligible persons will be able to purchase or build their first home with a deposit as little as 5%, with the government acting as guarantor for the lender for the remaining 15% needed to secure the loan.
To be eligible for assistance, properties must be residential. Price thresholds apply, allowing first-home buyers in Victoria to purchase homes up to the value of $700,000 (up from the previous cap of $600,000) in Melbourne metro and Geelong, and up to $500,000 (up from the previous cap of $375,000) across the rest of the state. Thresholds are particularly aimed at helping low to middle-income earners purchase their own home.
This post code tool will help you check the price threshold in your area.
What Can I Purchase Under the FHLDS?
As stated above, properties must be residential. However, the scheme allows for a wide range of property types including:
- Existing homes
- House and land packages
- Apartments or townhouses
- Land with a separate contract to build
Family Home Guarantee
The Family Home Guarantee, an incentive which was handed down in May 2021 as part of the new federal budget, is specifically designed to help single custodian parents reach their goal of owning their own home. It also includes parents who had previously been owner-occupiers and are wanting to get back on the property ladder.
Under the new initiative, eligible persons can secure a loan to purchase an existing home or build a new one with a deposit as low as 2%. The federal government is offering 10,000 places over 4 years, offering support in the areas of highest need.
Price thresholds apply to properties purchased under the Family Home Guarantee – in Melbourne metro and Geelong the price cap is $700,000 and for the rest of the state the price cap is $500,000. Again, the property purchased must be residential.
There are also other incentives in the new budget which are set to give many folks the push they need to enter the real estate market this year. Read on to find out what else you may be eligible for:
First Home Super Saver Scheme
The First Home Super Saver Scheme (FHSSS) is helping thousands of Australians get a deposit together for their first home by allowing them to access their superannuation money.
Under the new scheme, first home buyers can access up to $50,000 (was previously $30,000) of their superannuation money to put towards a home deposit.
HomeBuilder Scheme
If you’re looking to build a new home or renovate an existing one, this initiative will be of special interest to you.
Under the HomeBuilder scheme, eligible persons will receive a $25,000 contribution towards their new build or renovation project.
This grant can be used along with other schemes such as the FHLDS and FHSSS. Of course, there are eligibility requirements and income caps which must be met for you to be able to access this incentive.
What Does the Real Estate Market Look Like Right Now?
Right now, the real estate market in Australia remains steady and high. CoreLogic reports that the month of July saw an increase of 1.6% in housing prices across the country, with demand being fuelled by record low interest rates.
In Melbourne consumer preferences continue to lean towards the suburbia, with buyers still favouring detached housing options in lower density areas. Demand is currently outweighing supply and there is an undeniable urgency amongst buyers due to the lack of housing options.
In short, it’s a seller’s market!
The auction clearance rates across the city remain staggeringly high, with a figure of 73.1% for the week ending 4th July 2021. As more and more properties sell under the hammer, the median house price continues to spiral upwards.
Larger houses are on many buyers’ bucket lists, and with recent government incentives to encourage elderly people to sell their family homes and downsize, we expect to see more established family homes coming up for sale over the next few months. A succession of lockdowns across the city has been the catalyst for change in the way many homeowners think about their properties: with the home now acting as a relaxation space, work environment, school, restaurant and gym, many folks are re-evaluating their needs and looking for larger properties.
The team at Love & Co are right up to date with the federal incentives which may apply to you. And we’re here to give you all the support and advice you need on your journey to owning your own home.
The information in this article is for information purposes only and should not be taken as financial, legal or personal advice.
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