Improved First Home Loan Deposit Scheme gives first-time buyers greater options

Treasurer Josh Frydenberg this week announced that the scheme, which started in January, would be extended to a further 10,000 applicants seeking to buy a new home, with the price cap increasing to $650,000, up from $475,000, in Brisbane and regional centres.

In the rest of the state, the cap will rise to $500,000 from $400,000, with the latest tranche available from October 6 until June 30 next year.

The First Home Loan Deposit Scheme (FHLDS) allows first-home buyers to purchase a property with a deposit as low as 5 per cent, without needing to pay mortgage insurance, which is usually applied on deposits of less than 20 per cent.

The increased threshold for first-home buyers means there are 5054 properties on the market in the Greater Brisbane region alone that could be bought through the First Home Loan Deposit Scheme, according to figures from realestate.com.au.

In Brisbane 36 suburbs have a median house price of less than $650,000 with northern and eastern suburbs dominating.

Locations such as Aspley ($621,250), Chermside West ($637,500), Geebung ($550,000) and Banyo ($604,500) are the pick of the northern suburbs, while Wynnum ($645,500), Cleveland ($629,000), Alexandra Hills ($470,000), Victoria Point ($530,000) and Manly West ($649,000) are standouts in Brisbane’s east.

Only three western Brisbane suburbs make the list: Oxley, Moggill and Keperra, and there are seven southern suburbs to choose from, including Mount Gravatt East, Upper Mount Gravatt, Runcorn and Pallara.

Farther afield, Scarborough in the Moreton Bay region, Ipswich in the west, Logan and The Redlands in the south also have median house prices under $650,000.

The scheme extension is also a win for homebuyers wanting to purchase new speculative (spec) homes in estates that were built before the COVID-19 pandemic hit, making them ineligible for the $25,000 HomeBuilder grant.

The AVID Property Group has about 90 spec homes in the Greater Brisbane regions of Logan City and Moreton Bay Region that it expects will directly benefit from the Federal Budget’s First Home Loan Deposit Scheme announcement.

“We’re talking about completed homes that were previously difficult to get with HomeBuilder,” AVID general manager Queensland, Bruce Harper said.

“Most are in the Logan area with the Chambers Ridge Estate at Park Ridge, and then further north (at Acacia) in Burpengary. Speculative housing wasn’t eligible for HomeBuilder but now they will be popular because people will be able to purchase these with the 5 per cent deposit scheme.”

REA Economic Research executive manager Cameron Kusher said extending the loan scheme would help support off-the-plan apartment sales which he said had not been particularly stimulated by the HomeBuilder grant because of the need to start construction within three months of people signing apartment contracts.

Visiting the Silk One residential display centre at Woolloongabba on the weekend was Miriam Taylor, 32, of New Farm who has been looking for her first home for six months while sorting through the different financial incentives available to first-home buyers.

“There are so many options, to be honest, it’s a little bit overwhelming,” Ms Taylor said. “I don’t know what I’m entitled to and what I’m not.”

Ms Taylor has set herself a 5km radius from the CBD for her search and has a budget range of between $400,000-$600,000.

“I want inner-city because this is where my life is. I know I can afford more in the ‘burbs, but location is a big one for me.”

Meanwhile, Brooke Thomas, 37, a franchise agreement administrator, was one of the first applicants to be approved for the scheme when it kicked off in January. She has since moved in to her two-bedroom apartment in Greenslopes after putting down a 10 per cent deposit on an apartment worth up to $350,000.

Ms Thomas said it was fantastic that the government had decided to extend the scheme and increase the price cap because it would help others to buy in areas they previously may not have been able to afford.

She said when she came to buy, location was key. “I never thought I would be able to afford anything in Greenslopes. The scheme definitely helped me to get on the ladder, which was awesome, particularly with COVID hitting and not knowing what was going to happen.”

Across the country, first-home buyers are leading a sharp rebound in home loan lending with the Australian Bureau of Statistics reporting an 8.9 per cent increase in lending in July this year with the number of first-time owner occupiers taking out loans increasing by 14.4 per cent.