Bush Summit
Bush Summit

Should first-home buyers wait for ScoMo’s scheme?

First-home buyers ready to enter the market have been urged to do it now, rather than wait for Prime Minister Scott Morrison's assistance scheme to kick in.

Property experts say those who sit on their hands may end up worse off financially, also pointing out just one in 10 of the nation's first-time purchasers will score ScoMo's leg-up.

Mr Morrison pledged, before the federal election, to help young people get on the property ladder by topping up their 5 per cent deposits with a government guarantee for 15 per cent.

This would mean they'd avoid having to pay lender's mortgage insurance, which applies for deposits below 20 per cent.

Mr Morrison's $500 million scheme will be capped at 10,000 loans per year, and apply to singles with ­annual earnings up to $125,000 and couples, up to $200,000, from January 1, 2020.

Property data firm CoreLogic's research analyst Cameron Kusher said an average of more than 100,000 first-home buyers had made finance commitments in Australia annually over the past decade.

That meant "only about 10 per cent of first-home buyers will be able to access this scheme".

Mr Kusher said it could potentially help wannabe homeowners get into the market earlier.

But those using the scheme would still need to pass the same credit checks as everyone else.

"It has become increasingly more difficult to access a mortgage," he said.

"The scheme, as proposed, is not going to result in anyone that currently can't access a mortgage taking out a mortgage."

It could also have damning outcomes for housing affordability, Mr Kusher said, by increasing demand at the lower end of the market and, with it, prices.

Experts believe first-home buyers will face more competition over the coming months. Picture: Andrew Henshaw
Experts believe first-home buyers will face more competition over the coming months. Picture: Andrew Henshaw

Property Home Base director Julie DeBondt-Barker advised first-home buyers who'd already saved deposits to forgo Mr Morrison's helping hand and buy now.

"Waiting might cost you money," the buyer's advocate said, noting prices were already rising in the sub-$600,000 range where first-timers get stamp duty exemptions in Victoria.

Ms DeBondt-Barker said investors - typically first-home buyers' greatest competitors for properties - were also returning to the market following Mr Morrison's election win, which killed Labor's proposed negative gearing and capital gains tax reforms.

Darren Mehl, chief operating officer of first-home buyer focused building company Tick Homes, expected the scheme to "help more renters become buyers". But he said young people should be aware now was "a great time to be buying".

"Interest rates are at an all-time low, and housing prices across metropolitan Melbourne haven't been this low in a long time," Mr Mehl said.

A resounding 83 per cent of 1000 Victorian respondents to a recent Tick Homes survey named affordability as the main driver behind their first property purchase.

One in five said they'd snapped up the first home they looked at, with those quizzed ranking a "feeling of security" as the thing they loved most about their new place, followed by "making your own rules", having "room to move" and "freedom to decorate".

-with Jayitri Smiles

MORE: Great Australian dream fading in Manningham

Bargain Echuca beauty comes with a catch for buyers

Melbourne flammable cladding repairs could overwhelm rental market

samantha.landy@news.com.au

Originally published as Should first-home buyers wait for ScoMo's scheme?


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