Supporting home ownership

Financial challenges can prevent households from buying a home, but a range of government initiatives can help to pave the way to ownership.

Author

Kristin Brookfield

HIA has a proud history of supporting home builders and home building as a way to help all Australians have access to a home. Traditionally people see home ownership as their housing goal, but with the challenges of increasing house prices, many Australians find the path to ownership is not smooth.

HIA continues to work with governments to create mechanisms that can assist households, in particular those with low and moderate incomes, to enter the housing market by purchasing their first home. Once a household owns a first home, a future choice to move into another home becomes much less challenging.

For many households, achieving home ownership is first and foremost a financial challenge, balancing low or moderate incomes against deposit gaps, house prices and monthly mortgage repayments.

To assist first home buyers, and in some cases other home buyers, many state governments have established financial assistance schemes for households that meet specific eligibility criteria based on their income and current savings. These schemes go beyond just offering the first home owners one-off assistance in the form of a grant. Instead the focus is on long-term support that can be offered to a household where they can show capacity to service a loan for a home over the long term.

HIA has completed a stocktake of these schemes. The findings may be of interest to members and offer new ways to assist customers in taking the step from rental accommodation into home ownership.

Incentives for home buyers

Several states run schemes to assist first home buyers through a specialised home loan product. Some also have schemes available for any home buyer that meets certain criteria. 

The schemes generally offer access to a housing loan that has more favourable lending criteria such as a lower deposit (generally two per cent), reduced insurance costs and reduced fees.

The product is offered by the state government or a state government owned entity. The available schemes include Home Start Finance in South Australia, KeyStart’s Standard Home Loan in Western Australia and the Housing Finance Loan in Queensland.

The ACT offers an alternative approach with a scheme called Land Rent for private housing purchase to anyone that meets the eligibility criteria. This is a version of a shared equity scheme where the purchaser pays ‘rent’ (being significantly reduced land rates) for the land component and borrows sufficient funds for the construction of a new home in the normal way.

With the challenges of increasing house prices, many Australians find the path to ownership is not smooth

Incentives for public housing tenants

Across the country there are several schemes available to assist public housing tenants to purchase either the home they are in, or another public housing home. The loan product is similar to those available for private home buyers with low deposit requirements and reduced mortgage insurance and fees.

These schemes include the State Housing Loan in Queensland, the Streets Ahead Incentive Program in Tasmania and the Home Buyer Incentive in the Northern Territory.

Shared equity schemes for public housing tenants

Shared Equity is a variation on the theme. Offered by state governments, shared equity arrangements seek to support a home buyer by reducing the upfront amount they need to borrow. This is generally reduced to around 70 per cent of the house and land price, with the government retaining ownership of the remaining 30 per cent.

This option is available in several states for public housing tenants. There are varied timeframes and options for an owner to buy the remaining 30 per cent equity over time.

Again this type of loan follows the trend of being a low deposit loan for the lower amount, with reduced fees and mortgage insurance requirements.

The schemes on offer include the Pathway Shared Equity Loan in Queensland, the Shared Equity Scheme in the ACT, HomeShare in Tasmania, the HomeStart Shared Equity Loan in South Australia and the KeyStart SharedStart Home Loan in Western Australia.

Grants and concessions

First Home Owner Grant

For most of the last decade the First Home Owner Grant has been available for the construction of a new home in all states and territories. The amount varies between states, and the value of the home eligible for the rebate also varies. There are no income limitations to the grant.

Currently the First Home Owner Grant ranges from $7,000 in the ACT, up to $20,000 in Tasmania and regional Victoria and $26,000 in the Northern Territory.

Stamp duty concessions

Stamp duty (or transfer duty) applies to buying both new homes and existing homes. The majority of states offer a concession or an exemption for the payment of stamp duty to first home buyers. These concessions apply for both new and existing homes in most states, but are limited to existing homes in the Northern Territory and new homes in the ACT.

When combined, these incentives can provide valuable support for low and moderate income households to buy their first home. HIA will continue to work with federal and state governments to ensure that these types of alternative pathways towards home ownership remain available to assist more Australians to enter the housing market. Having a secure place to call home through home ownership remains a fundamental part of the fabric of Australian society.

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