Move to help first home buyers get in the door

THE federal government is being urged to increase the price cap for first home buyers, with new data showing that they are effectively locked out of purchasing a house in more than 500 Queensland suburbs.

Under the expanded Home Guarantee Scheme, eligible first time buyers can purchase a home with just a 5 per cent deposit, with the government guaranteeing the other 15 per cent, removing the need for lenders mortgage insurance.

But property prices for existing dwellings are capped at $600,000 in Brisbane, the Gold Coast and Sunshine Coast under the First Home Loan Deposit Scheme, and $450,000 in other parts of the state – a tough ask given that the pandemic property boom has forced house prices to dizzying new heights.

The latest REA Market Trends report shows there are now 513 suburbs with median house values north of $600,000, from Cairns to the Gold Coast.

The New Home Guarantee offers caps of $650,000 in the southeast and $500,000 elsewhere, but even those thresholds would be challenged in the current market.

Corelogic estimates that 39.8 per cent of dwellings – houses and units – would qualify for the scheme in Queensland, with that number shrinking to just 22.3 per cent on the Gold Coast and Sunshine Coast, which is less than in Sydney (23.3 per cent).

Only Hobart had fewer properties eligible for the guarantee, with 15.1 per cent of dwellings priced below the cap.

Proptrack economist Angus Moore said that while the scheme would help some first home buyers buy sooner in the short term, it could not be a long-term solution to housing affordability.

“The only long-term solution to tackling housing affordability is on the supply side – we have to build more homes,” he said.