More home buyers take up government help to purchase

More home buyers are using government home loan guarantees to help them purchase a property, however, only two-thirds of the 50,000 guarantees on offer in FY23 were taken up.

More than 32,500 guarantees were issued in FY23, according to Housing Australia’s annual report on the Home Guarantee Scheme. The scheme comprises three segments – the First Home Guarantee (FHBG), the Family Home Guarantee (FHG) and the Regional First Home Buyer Guarantee (RFHBG).

The schemes allows first home buyers to purchase with a mere 5% deposit, and single parents need just 2%. This is vastly lower than the standard 20% deposit required by most lending institutions. In FY23, just under 70% of FHBG guarantees were taken up, along with just 60% of RFHGB guarantees and only 36% of FHG guarantees. The remaining guarantees expired.

Those using the scheme represented one in three of all first home buyers across Australia in FY23, up from one in seven in FY22. According to the report: “The dramatic change is likely due to a combination of the increased number of available Scheme places in 2022–23, the widened eligibility within the Scheme and first home buyers facing a more challenging purchasing environment.”

Housing Australia’s head of research, data and analytics, Hugh Hartigan said substantial increases in interest rates since May 2022 had led to more buyers relying on government help to buy a home. “The broader macroeconomic environment with rapidly rising interest rates has substantially decreased mortgage serviceability with flow-on effects for affordability and this has led to first home buyers relying more heavily (proportionally) on the scheme than in previous years,” he said.

Among the trends are an increasing number of younger Australians and essential workers seeking help. More than half of all places under the FHBG and RFHBG were taken up by first-time buyers aged under 30. That’s up from about a third in FY20, when the scheme was first introduced. About 14% of FHBG guarantees issued in FY23 went to buyers aged 18 to 24 years, up from 3% in FY20. Essential workers such as teachers, nurses and social workers took up 7,721 guarantees in FY23, up from 5,650 in FY22.

At a state and territory level, demand for guarantees remained strongest in Queensland and Western Australia in FY23. Buyers in Greater Perth, Melbourne, Greater Brisbane and regional Queensland received the largest number of guarantees in FY23.

The most popular postcodes for scheme buyers were 4740 (Mackay Harbour, QLD area), 6112 (Armadale, WA area), 4207 (Beenleigh, QLD area), 4350 (East Toowoomba, QLD area), 3064 (Craigieburn, VIC area), 4305 (Ipswich, QLD area), 6171 (Baldivis, WA area), 6164 (Hammond Park, WA area), 3029 (Truganina, VIC area) and 4680 (Gladstone, QLD area).

The scheme has been expanded for FY24 to include eligible permanent residents, non-first home buyers who have not owned a property in the past 10 years, and any two applicants such as friends, siblings, and married or de facto couples. The FHG has also been expanded to include eligible single legal guardians.

The post-COVID return to CBD offices continues across Australia, with the average office occupancy rate climbing to 76 percent of pre-pandemic levels in the first quarter of 2024, according to new CBRE figures. Workers are gradually responding to their employers’ requests to attend their offices more regularly to enable greater collaboration with workmates. The occupancy rate has risen from 70 percent in the December quarter and 67 percent 12 months ago.

Occupancy rates improved across all capital cities during the March quarter, with Perth and Adelaide maintaining the strongest rates of 93 percent and 88 percent respectively. CBRE analysis suggests shorter commuting times and less structured working-from-home arrangements in these cities have contributed to higher rates of return. Brisbane’s occupancy rate is 86 percent of pre-COVID levels, weighed down by a slower return within the public sector, which represents 35 percent of the city’s office space. This same trend is being seen in Canberra, where the occupancy rate is just 66 percent.

In Sydney, the occupancy rate has risen to 77 percent, largely due to major banks and professional services firms pushing for more staff to return to the office this year. There has been a significant increase in workers returning to offices in Melbourne, with the occupancy rate up from 57 percent last quarter to 62 percent now. However, this is still the lowest attendance rate in the capital cities.

Businesses are increasingly pushing workers to return to the office because they are concerned working from home over multiple years will have a negative long-term impact on company-wide productivity. Part of the problem is new employees not having regular access to senior staff so they can learn and work more effectively and productively. CBRE says lower levels of collaboration and interaction reduce innovation, which is a particular concern for technology firms. They were quick to embrace remote working during COVID, but are now seeing dampened creativity among staff.

Tuesday is the peak day for attendance at CBD offices and Friday is the lowest day. Two-thirds of organisations that have moved their corporate headquarters since COVID have chosen to upgrade to premium office buildings, according to CBRE’s research. Premium blocks typically feature retail, restaurants, and recreational amenities on the ground floor, and command a higher rent. Companies are deciding it’s worth the cost to entice workers backand keep them feeling happy and engaged.

Jenny Liu, Director of Workplace Consulting at CBRE, said a vibrant workplace experience is essential.

“A workplace experience isn’t just environment, cool furniture and tech anymore,” she said. “It’s the culture, ways of working, leadership, and how vibrancy is created.”

Some companies are using apps that inform staff who will be in the office tomorrow. CBRE Research Manager Thomas Biglands said:

“It’s important that you achieve a critical mass of visitation so that employees come in and feel as though the office is vibrant and full,” he said.

Some firms are linking salary and promotions to office attendance to reward those workers providing higher contributions to corporate culture and mentoring younger staff.

The rate of return to offices in Australia is much higher than in the United States, where occupancy rates have remained at about 50 percent over the past year. CBRE analysis suggests this may be due to better public transport, shorter commutes and lower inner-city crime rates in Australia.

More home buyers take up government help to purchase

While more first home buyers and single parents took up Home Loan Guarantees in FY23, about 17,500 spots were left on the shelf

Companies are leasing premium office space to entice workers back, but employees in one major capital are holding out