Help for First Home Buyers

An update from Managing Director Daryl Borden - as seen in the Dingley Dossier

Affordability of housing continues to be an issue which affects us all, but none more than first home buyers. The Victorian Government has recently announced measures aimed at making home ownership easier for those young people.

Note most measures are still subject to approval through parliament, but it is important to be aware of the proposals:

  • Stamp duty for first home buyers on properties worth $600,000 or less will be abolished (currently 50% discount applies), with a concessionary sliding scale applying to purchases up to $750,000. Commencing contract signing date 1st July 2017, applying to all properties, new and existing.
  • The existing first home owners grant (FHOG), available to first home buyers who are either building or buying a new home valued up to $750,000, will be doubled from $10,000 to $20,000 for regional buyers, again applicable 1st July 2017. Regional areas will be defined by Municipality, unfortunately it appears Mornington Peninsula Shire will not be included in that list. Eligible buyers within metropolitan areas will continue to receive the $10,000 FHOG.
  • A co-ownership pilot scheme has also been announced. Called HomesVic, eligible first home buyers will be able to co-purchase a new or existing home with the Victorian Government. The idea is to help young buyers who are capable of meeting loan repayments but cannot save sufficient deposit. The first home buyer will need only a 5% deposit saved, with the government contributing up to 25% for an equity ownership share. When the property is sold HomesVic will receive its equity share back. Income eligibility thresholds will apply, the scheme is due to commence 1st January 2018.
  • At least 10% of all properties in government led urban renewal developments will be allocated to first home buyers. This measure will be implemented for the first time in the Arden development, North Melbourne, with some 1,500 homes reserved for first home buyers.

In addition to these measures the government will be increasing land supply by re-zoning 100,000 lots across Melbourne to create 17 new suburbs, and removing off-the-plan stamp duty concessions for investors.

There will also be introduction of a vacant property tax to discourage investors from leaving properties unoccupied. This is an excellent initiative. While the number of vacant properties is subject to speculation, it is sometimes forgotten how important the provision of rental properties into the market is.

Melbourne has faster population growth than any other Australian city. The affordability crisis is due to massive demand for a limited supply of property, due to the large number of people who want to live in Melbourne, and while that demand continues there will be no complete solution to the affordability problems. 

Congratulations are due to the Victorian government for the measures they are introducing to at least provide some assistance to those that need it most. Continued improvements to infrastructure (housing and transport) to keep pace with population growth are essential if Melbourne is to remain a city to be proud of.

Of course Australia has two cities with the same problem. Sydney prices make Melbourne look attractive! Tonight the Federal Government is due to hand down the budget, with an ‘affordability package’ expected to address this continuing issue. Let’s hope they get it right.