recent inquiry into housing affordability and supply<\/a> in Australia.<\/p>\n\u201cThis latest inquiry into housing affordability is not the first and findings of past inquiries remain unaddressed or have focused on demand strategies, which will not solve a supply problem,\u201d he said.<\/p>\n
Both sides of government were also lambasted by RateCity.com.au research director, Sally Tindall.<\/p>\n
\u201cSo far, the major parties have put forward piecemeal schemes in an attempt to address Australia\u2019s housing affordability problem but the problem is that neither scheme will make housing any more affordable,\u201d she said.<\/p>\n
\u201cProperty prices and new mortgage sizes are at record highs, while risky lending, where people are taking on debts that are six times or more their annual income, continues to rise.\u201d<\/p>\n
Home Guarantee Scheme: why buying with a small deposit can be risky<\/strong><\/p>\n\n\n\n| City<\/th>\n | Property\u00a0value
today<\/th>\n | Property value
end 2024<\/th>\n | Change in property price
by end 2024<\/th>\n | Equity at purchase<\/th>\n | Equity
end 2024<\/th>\n | Increase in repayments
end 2024<\/th>\n<\/tr>\n |
\n| Sydney<\/td>\n | $800,000<\/td>\n | $691,600<\/td>\n | -$108,400<\/td>\n | 5%<\/td>\n | -6%<\/td>\n | $539<\/td>\n<\/tr>\n |
\n| Melbourne<\/td>\n | $700,000<\/td>\n | $598,780<\/td>\n | -$101,220<\/td>\n | 5%<\/td>\n | -7%<\/td>\n | $471<\/td>\n<\/tr>\n |
\n| Brisbane<\/td>\n | $600,000<\/td>\n | $570,240<\/td>\n | -$29,760<\/td>\n | 5%<\/td>\n | 3%<\/td>\n | $404<\/td>\n<\/tr>\n |
\n| Perth<\/td>\n | $500,000<\/td>\n | $465,300<\/td>\n | -$34,700<\/td>\n | 5%<\/td>\n | 1%<\/td>\n | $337<\/td>\n<\/tr>\n |
\n| Adelaide<\/td>\n | $500,000<\/td>\n | $475,200<\/td>\n | -$24,800<\/td>\n | 5%<\/td>\n | 3%<\/td>\n | $337<\/td>\n<\/tr>\n |
\n| Hobart<\/td>\n | $500,000<\/td>\n | $460,600<\/td>\n | -$39,400<\/td>\n | 5%<\/td>\n | 0%<\/td>\n | $337<\/td>\n<\/tr>\n |
\n| Canberra, Darwin<\/td>\n | $500,000<\/td>\n | $441,750<\/td>\n | -$58,250<\/td>\n | 5%<\/td>\n | -4%<\/td>\n | $337<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Source: RateCity.com.au Notes: based on a first home buyer buying a property at the end of 2022 as part of the government’s FHLDS paying principal and interest on CBA’s lowest variable rate applicable for low deposit loans. Assumes property is purchased with a 5\u00a0per cent deposit at the top of the property price caps as determined by NFIC. Westpac economics’ property price and interest rate forecasts are applied. Property price forecasts for Canberra and Darwin are based on national forecasts.<\/p>\n \u201cThe regulators are sending out warnings while the politicians are telling people to jump in,\u201d Ms Tindall said.<\/p>\n \u201cEncouraging people to buy at inflated prices with next-to-no buffer in the face of rising interest rates comes with some pretty serious risks.<\/p>\n \u201cTo date, the Home Guarantee Scheme has helped thousands of Australians get a foot on the property ladder, and in many cases, capitalise on rising property prices. However, the outlook for the next couple of years is very different.<\/p>\n \u201cProperty prices are forecast to fall significantly in both Sydney and Melbourne over the next two years, so anyone buying with a 5 per cent deposit now, could find themselves owing the bank more than their property is worth by the end of 2024.<\/p>\n \u201cWhile most new buyers should be able to ride out a drop in the property market, anyone who hits a rocky patch with no buffer, might not be able to make their monthly repayments and risk losing their home.<\/p>\n \u201cPurchasing a property with a small deposit might help people buy sooner, however the ramifications of taking out a larger loan should be carefully considered.<\/p>\n \u201cBuying with a 5 per cent deposit means a person\u2019s loan size is significantly larger than if they had bought with a 20 per cent deposit, which means when interest rates rise, their repayments will go up by more.\u00a0<\/p>\n \u201cIf property prices then drop, people using this scheme are also likely to be locked into their lender and their guarantor for longer.<\/p>\n \u201cFor anyone thinking about buying a property using this scheme, go in with your eyes wide open.<\/p>\n Voicing support<\/strong><\/p>\nOther organisations were more generous towards both parties\u2019 policies, with the Real Estate Institute of Australia, Property Council of Australia and Housing Industry Association (HIA) speaking out in favour of one or both.<\/p>\n HIA Managing Director, Graham Wolfe, said extension of the first home loan deposit\u00a0scheme and the new home guarantee scheme will make a real difference in the lives of thousands of Australians looking to achieve home ownership over the next three years.<\/p>\n \u201cMany people each year can find themselves back in the rental market after selling their home,\u201d he said.<\/p>\n \u201cThe reasons vary but once in the rental market, saving a deposit to buying a new home can be just as big a hurdle as it is for first home buyers.<\/p>\n \u201cUntil now, there has been nothing available to help these people re-enter the housing market.\u201d<\/p>\n Property Council of Australia Chief Executive Ken Morrison said Monday\u2019s announcement was a very positive measure to help more aspiring homebuyers overcome the widening deposit gap.<\/p>\n He also echoed the REINSW in urging the Government to do more to tackle housing supply in order to address affordability problems.<\/p>\n REIA President Mr Hayden Groves said the Government\u2019s decision to unlock 50,000 new places for the Home Guarantee Scheme made the dream of home ownership one step closer for eligible Australians.<\/p>\n \u201c35,000 places for first home buyers with additional targeted measures of 5,000 for the Family Home Guarantee and 10,000 for a newly created tranche called the Regional Home Guarantee are welcomed.<\/p>\n \u201cThis is the combined equivalent of around $24 billion in guarantees and around $30 billion in sales to first home buyers based on the median home loan of $470,548.\u201d<\/p>\n \u00a0<\/p>\n<\/p><\/div>\n |
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