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
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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.
Rising rates, construction inflation and shrinking investor confidence are pushing Australia deeper into a dangerous housing spiral that monetary policy alone cannot fix.
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Rising rates, construction inflation and shrinking investor confidence are pushing Australia deeper into a dangerous housing spiral that monetary policy alone cannot fix.
2 minThe Reserve Bank had little choice but to raise interest rates again this week.
Inflation was already proving stubborn before the latest Middle East instability added further pressure to energy prices and supply chains.
Housing inflation alone has averaged six per cent over the past year, remaining one of the single biggest contributors to CPI.
But while the focus remains on rates, the deeper problem is structural and far more dangerous.
Australia is not building enough homes, and the conditions required to fix that are deteriorating simultaneously.
Construction costs remain elevated. Builders are increasingly unwilling to absorb contract risk. Labour shortages persist.
Capital is becoming more expensive. And as borrowing capacity weakens and sentiment softens, fewer projects are becoming financially viable.
The result is a self-reinforcing cycle.
The RBA raises rates to fight inflation. Higher rates reduce development feasibility. Fewer projects start. Housing supply tightens further. Rents rise. Inflation persists. The RBA raises rates again.
The only long-term solution is supply, yet Australia remains nowhere near the National Housing Accord target of 240,000 new dwellings a year.
Completion continues to lag approvals, meaning many projects approved on paper are simply never making it out of the ground.
That gap matters enormously because housing is not just another sector of the economy.
Around two-thirds of Australian household wealth is tied to property, while the sector underpins millions of jobs and related industries. Weakness here quickly spreads beyond real estate.
We are already seeing signs of stress. Auction clearance rates in Sydney and Melbourne have softened, borrowing capacity has declined, and parts of the market are experiencing price corrections as confidence weakens.
At the same time, policymakers continue to debate tax measures such as changes to negative gearing and capital gains tax discounts, despite fears that such reforms could drive private capital out of the rental market at precisely the moment when supply is most constrained.
This is the paradox at the centre of Australia’s housing crisis.
Demand for property remains extraordinarily high, yet the economic conditions required to actually build new housing are worsening.
The Reserve Bank cannot solve that problem alone.
Monetary policy cannot accelerate planning approvals, reduce construction costs or create more tradies. It can only raise the cost of money until something eventually breaks.
And increasingly, that “something” looks like the development pipeline itself.
Paul Miron is the Co-Founder & Fund Manager of Msquared Capital.
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