One of the main reasons property prices rose so much through the pandemic was the healthier home balance sheet, or in a buyers language, saving a bigger deposit. Fueled by low interest rates and a few other factors, this was the primary reason people were able to pay more.
Conversely, the lack of a sizable deposit is one of the biggest barriers for first home buyers entering the market without paying expensive LMI. Bridging this deposit gap is one of the few levers governments have available to them to address home affordably (in the short term) and in last night’s Federal Budget the coalition pulled it again by expanding home guarantee schemes.
The government has increased the First Home Loan Deposit Scheme (FHLDS) by 35,000 places per year and added 10,000 places for a Regional Home Guarantee (RHG) which will be available to first home buyers, those who have not owned a home for 5 years and permanent residents from 1st October.
The FHLDS has been further pointed in its target by only being eligible to individual buyers with an income under $125,000 and $200,000 for couples. Additionally, it only applies to purchases upto a price cap which varies between each capital city or regional center and country areas as follows.
| State / Territory | Capital and major Regional Centres | Rest of State Territory |
| NSW | $800,000 | $600,000 |
| Vic | $700,000 | $500,000 |
| Qld | $600,000 | $450,000 |
| WA | $500,000 | $400,000 |
| SA | $500,000 | $350,000 |
| Tas | $500,000 | $400,000 |
| ACT | $500,000 | N/A |
| NT | $500,000 | N/A |
It has been argued by many that the home buyer schemes of various forms, push up prices due to it increasing demand in that price bracket. Given a large percentage of home sales under $700,000 are apartments and Melbourne’s median house price is at $1,100,000, the cap for FHLDS at $700,000 directly boosts the apartment market.
