First Home Buyers Given Leg Up In Budget
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First Home Buyers Given Leg Up In Budget

The government has outlined plans to expand its First Home Loan Deposit Scheme.

By Terry Christodoulou
Tue, Mar 29, 2022 1:39pmGrey Clock < 1 min

The Federal Budget for 2022 is set to ‘unlock’ 50,000 new places for the First Home Loan Deposit Scheme (FLHDS).

Real Estate Institute of Australia (REIA) president Mr Hayden Groves said this significant investment into supporting home ownership shows confidence that the scheme is serving the private property market.

“NHFIC (the National Housing Finance and Investment Corporation) estimates that around 15% of Australian households are prospective homeowners and this announcement makes that dream one step closer for those Australians who are eligible,” said Mr Groves

“The number of first home buyers decreased to 37,620 in the quarter, a decrease of 18.3% over the past 12 months.

“At the same time the average loan size increased to $470,548, an increase of 12.9% over the same period.”

Mr Groves said that the support of the FHLDS was a priority for the REIA and went on to thank the Federal Minister for Housing, Michael Sukkar MP.

“REIA supported this innovation in public policy when it was first announced in the Federal Election 2019 and the program has gone from strength to strength.

“Now up to 1 in 10 first home buyers utilise the Guarantee program with 6,000 of Australia’s key workers securing their first home through this program – our COVID-19 heroes.”

With the government seeking to triple the scheme from an initial 10,000 places in 2019, Mr Groves suggests Australians looking to buy their first home seek advice for accessing the scheme.

“With these new places coming online you will have more opportunity than ever to secure a place, we strongly encourage interested first home buyers to speak with their mortgage broker.”

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House values continued to fall last month, but the pace of decline has slowed, CoreLogic reports.

In signs that the RBA’s aggressive approach to monetary policy is making an impact, CoreLogic’s Home Value Index reveals national dwelling values fell -1.0 percent in November, marking the smallest monthly decline since June.

The drop represents a -7.0 percent decline – or about $53,400 –  since the peak value recorded in April 2022. Research director at CoreLogic, Tim Lawless, said the Sydney and Melbourne markets are leading the way, with the capital cities experiencing the most significant falls. But it’s not all bad news for homeowners.

“Three months ago, Sydney housing values were falling at the monthly rate of -2.3 percent,” he said. “That has now reduced by a full percentage point to a decline of -1.3 percent in November.  In July, Melbourne home values were down -1.5 percent over the month, with the monthly decline almost halving last month to -0.8%.”

The rate of decline has also slowed in the smaller capitals, he said.  

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Mr Lawless said. “However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.” 

The RBA has raised the cash rate from 0.10 in April  to 2.85 in November. The board is due to meet again next week, with most experts still predicting a further increase in the cash rate of 25 basis points despite the fall in house values.

Mr Lawless said if interest rates continue to increase, there is potential for declines to ‘reaccelerate’.

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire,” Mr Lawless said.

Statistics released by the Australian Bureau of Statistics this week also reveal a slowdown in the rate of inflation last month, as higher mortgage repayments and cost of living pressures bite into household budgets.

However, ABS data reveals ongoing labour shortages and high levels of construction continues to fuel higher prices for new housing, although the rate of price growth eased in September and October. 

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