Home Guarantee Scheme Boosts Buyer Opportunities

In July 2024, property investors committed a staggering $11.71 billion in home loans, marking the second-highest monthly figure on record, as reported by the Australian Bureau of Statistics. This represents a 35.4% increase compared to July 2023, reflecting the rapid growth in investor activity.

The federal government’s Home Guarantee Scheme (HGS) played a crucial role in this momentum, helping 43,800 buyers to enter the property market during the 2023-24 financial year, according to Housing Australia.

The HGS offers three distinct programs:

  • First Home Guarantee:
    Supports eligible first home buyers, or those who haven’t owned a home in at least 10 years, to purchase a property with a 5% deposit and no lender’s mortgage insurance (LMI).

  • Regional First Home Buyer Guarantee:
    Provides similar benefits, but is specifically designed for regional buyers purchasing regional properties.

  • Family Home Guarantee:
    Assists single parents and legal guardians to buy a property with a 2% deposit, without paying LMI.

  

The government has set aside 50,000 places for these programs in the 2024-25 financial year. All three programs are restricted to owner-occupiers, with specific income limits ($125,000 for singles and $200,000 for joint applicants) and property price caps.

Meanwhile, home buyers currently have a greater selection of properties than earlier in the year, strengthening their negotiating position. SQM Research revealed that national property listings rose by 7.9% in August compared to the previous month, and were up 11.1% from the previous year. New listings also saw an increase of 11.8% month-on-month and 8.5% year-on-year.

As we approach the spring selling season, buyers can expect more choices, especially in Sydney and Melbourne where listings are at their highest in recent years. This shift could empower buyers to make lower offers, but may present challenges for sellers, who will face more competition and potentially be compelled to lower their sale price.

If you’re considering leveraging the HGS, SCM can guide you through the eligibility process and manage your home loan application. Get in touch with us today via the link below.

Steven Papanastasiou – Principal, SCM Finance Solutions

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