Financial support for home buyers
Governments provide financial support to assist first home buyers, low-income households, Indigenous Australians, and vulnerable people to buy a house. The four main types of support available to home buyers are Home purchase assistance, First Home Owner Grant scheme, First Home Super Saver Scheme and Home Guarantee Scheme.
Home purchase assistance provides financial assistance, such as direct lending, concessional loans, and mortgage relief, to eligible low-income households to improve their access to, and to maintain home ownership. Households may receive more than one type of home purchase assistance (AIHW 2022).
First Home Owner Grant Scheme, introduced nationally on 1 July 2000, is funded by the state and territory governments and administered under their legislation. A one–off grant is payable to low–income first homeowners who apply and satisfy eligibility criteria. Examples are that at least one applicant must be a permanent resident or Australian citizen, each applicant must be at least 18 years of age, and temporary residents do not qualify to receive the grant (Australian Government 2020).
The Indigenous Home Ownership Program facilitates home ownership for Indigenous Australians by providing access to affordable home loan finance. The program aims to address barriers to home ownership, such as loan affordability, low savings, impaired credit histories and limited experience with long-term loan commitments (IBA 2021).
First Home Super Saver Scheme, introduced by the Australian Government in the 2017–18 Federal Budget, supports first home buyers who meet the eligibility criteria to save money for a house deposit using their superannuation fund. They can voluntarily contribute up to $15,000 in any one financial year, up to a total of $50,000, from 1 July 2022. They receive the tax benefit of saving through their superannuation contribution arrangements (ATO 2022).
Home Guarantee Scheme (HGS), comprises the First Home Guarantee (FHBG), previously known as the First Home Loan Deposit Scheme, and the Family Home Guarantee (FHG). Under the First Home Guarantee, an eligible first homebuyer can purchase a property with a deposit of as little as five per cent, while through the Family Home Guarantee a single parent with dependents can purchase a home with a deposit of as little as two per cent. From 1 July 2022, the number of places available through the First Home Guarantee increases from 10,000 to 35,000 per financial year. The Family Home Guarantee will have an annual allocation of 5,000 places from 1 July 2022 until 30 June 2025 (NHFIC 2022).
HomeBuilder scheme was announced on 4 June 2020, with the aim of encouraging eligible owner-occupiers to build a new home or substantially renovate an existing home. The grant provided $25,000 to eligible contracts signed between 4 June 2020 and 31 December 2020. Eligible contracts signed between 1 January 2021 and 31 March 2021 were offered $15,000. On 17 April 2021, the construction commencement requirement was extended from six months to 18 months for all existing applicants (The Treasury 2021).
In 2020–21, around 44,200 instances of home purchase assistance were provided across Australia. Of these:
- over one-quarter (27% or 11,900) of the main applicants receiving assistance were aged 35–44
- about one-fifth (20%) of recipients earned a gross income of less than $700 per week ($36,400 per annum)
- 58% (or 25,700) of households receiving home purchase assistance were in Major cities, 25% (11,300) in Inner regional areas and 12% (5,300) in Outer regional areas. Only a small proportion were in Remote (2.8% or 1,200) or Very remote (2.7% or 1,200) areas (AIHW 2022).
Lending commitments to owner occupier first time home buyers increased, from around 81,650 commitments in the 12 months to May 2017 to 138,400 in the 12 months to May 2022 (ABS 2022c).
Trends in the private rental market
The proportion of households renting – which also includes renting from state or territory authority, community housing provider, person not in the same household, other landlord types, dwellings occupied rent free or under a life tenure scheme – has had a disproportionate impact on younger households over recent years. There has been a sharper increase in the proportion of young Australians renting compared with older Australians (Figure 3).