Why does Vic need Two Shared Equity Property Schemes?

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With the 2022 Australia’s Federal election run and won, we can now look back to review their policy on property.

State and Federal Shared Equity Schemes

Aimed directly at lower to middle income earners, the Federal Labor Party announced the Help to Buy Scheme to support buyers, by funding part of the purchase of a residential property. If this scheme sounds familiar, …it is. The Victorian Labor Government has a very similar one, the Shared Equity Scheme.

So we now have both the Victorian State and Federal Governments providing very similar schemes designed to assist lower and middle income earners enter the property market. Most economists and market commentators, agree this will fuel the market and make it harder for some people to buy. This is good for sellers of property that has a value under the price thresholds which includes many apartment owners. However, that outcome is counterproductive to the policy.

Interestingly, the government participates in any capital gain at the time of sale which diminishes the capital gain of the home owner.

Compare the two Shared Equity Schemes

Here is how the two schemes compare.

FederalState
Equity Contribution Max30-40%25%
Minimum deposit2%5%
Max Price limit (Vic Metro)$850K$950K
Max Price limit (Vic Regional)$850K$600K
Individual Income threshold$90K$125K
Joint app income threshold$120K$200K
LMI (Mortgage insuranceNilNil

There are other criteria such as being an owner occupier purchaser and not owning other property (not necessarily a first home buyer).

I am sure many people are asking why do we have both a State and Federal shared equity scheme with slightly different criteria but doing same thing. Both schemes have a limited allocation so hopefully there is some coordination but that may be wishful thinking.

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