I've been riding horses since I can remember, really. So yeah, living with the horses would
be the dream. Walking out the back door and seeing them
would just be fantastic.
Charlotte Stacey and Austin Pond have moved
back in with Austin's parents in Tasmania to save for a house deposit.
So they have to keep their two horses at a neighbour's property.
We're probably roughly around the 10 per cent mark, I'd say, maybe 11 or 12 (per cent),
depending on the house price but it's been, you know, it's been a pretty hard slog. Like
we've been saving pretty well.
They're looking for a property around the
$300,000 mark which would mean they would have needed a $60,000 deposit to avoid lenders'
mortgage insurance. But just a week before Saturday's election,
they finally had some good news.
Our new first home loan deposit scheme I announce
today, will enable first homeowners to buy their home with a deposit of down to 5 per
cent. This will make a big difference.
It's great to see a lot of first home buyers out and about.
The scheme means the Government will guarantee the additional amount needed to reach 20 per
cent, allowing borrowers to avoid paying thousands of dollars in mortgage insurance.
It's only available to singles earning less than $125,000 a year, or couples on less than $200,000.
It starts opening doors to well, maybe in
a year or so, we'll be living in a house, as opposed to five years.
Nadine McAlister and her son, Ollie, have also moved back in with her parents in regional
Queensland to save for a house deposit. We'd have to save about $40,000. That would
probably take us anywhere up to five years, I think, which is certainly not ...
I don't want to live with my parents for another five years.
(To Ollie) Do you want Vegemite and cheese or peanut butter and jam?
The nursing student believes the Government's policy could cut that time in half.
We're living four and a half people in a two- bedroom house. So it is definitely going to
change our lives. Space-wise, it is definitely going to be a
life changer.
The deposit is arguably the biggest hurdle
to buying a house in Australia. So it used to take something like five or
six years for the average person on the average income to buy the average house, to save a
20 per cent deposit in order to buy that house. Now it's taking something more like 10 years.
The Grattan Institute's, Brendan Coates, estimates around 127,000 Australians earn under the
wage cap, and already have a 5 per cent deposit. But he says that doesn't guarantee them entry
into the property market.
The reality is quite a lot of those people
will never get access to this scheme because they may struggle to ever be able to afford
a loan based on the bank regulations around how much you have got to be able to repay.
Getting that loan could be easier from today. After the banking regulator proposed scaling
back its requirement for borrowers to show that they could repay a loan at a 7 per cent
interest rate. At the same time, the Reserve Bank has signalled
that it is poised to cut interest rates next month.
Combined, some economists say those measures could see house prices begin to stabilise.
If APRA does, in fact, remove this floor, some people will be able to borrow more, and
some will take advantage of that and that will help.
But that's not a substitute for lower interest rates so it is complimentary but it is not
a substitute.
And the scheme won't help all first home buyers.
It's capped at 10,000 borrowers, approximately 10 per cent of the Australians who bought
their first home last year.
It means the policy is either going to be
fairly irrelevant. It is not going to do a lot to boost home ownership.
If it did do a lot to boost home ownership, if the scheme was uncapped, it would simply
lead to more demand, which would push up prices, which would hurt first home buyers rather
than helping them.
In a market where, at the moment, house prices
are still continuing to fall, and the one to two year outlook is reasonably uncertain,
I'm not sure that encouraging a cohort of buyers without an established credit history,
to take out loans at a high LVR (loan-to-value ratio) is hugely sensible.
I mean the point with this is that the money ultimately has to be paid back.
JP Morgan economist, Sally Auld, says it could also mean some first home buyers end up in
negative equity, owing more than their property is worth and if they default, the taxpayer
will foot the bill.
I think the risk with these sorts of policies
is that we look back in five years' time and something that started off quite small and
for only 10,000 people, suddenly turns into something much bigger and much more, potentially,
costly for the government.
Thank you very much.
This is just the latest in a long line of Australian Government policies to encourage
home ownership. As early as 1918, the government was helping
ex-service personnel get into the market with low interest loans.
In the '60s, the Menzies government started paying grants to young first home owners.
The following decade, Whitlam replaced the grant with income tax deductions for mortgage
interest payments. In 1976, Fraser reintroduced and boosted the
home deposit assistance grant. Then in '83, Hawke replaced it with an even
bigger grant, before scrapping it in 1990. Ten years later, it was reintroduced by Howard,
and in 2008, temporarily boosted by the Rudd government during the global financial crisis.
And in 2017, the Coalition Government introduced a scheme to allow first home buyers to save
for a deposit within their superannuation fund.
It's endemic of Australian housing policy over the last three decades that we've done
the things that sound good, but won't work, rather than facing what are much more politically
difficult choices, to boost supply by changing planning rules, or to change the tax system
that would make housing more affordable in the long run, but they're much more politically
contentious in the short term. Until we pick up some of those kinds of policies
and tell the Australian people squarely that's what it's going to take to improve home ownership
in Australia, we're likely to keep going backwards.
And they have really good views, good spots for photos.
As Austin and Charlotte plan their wedding
for later in the year, they're hoping the new policy will mean they won't have to start
their married lives living with their parents.
It would be fantastic. I couldn't really imagine
starting life as a newlywed living with my in-laws as lovely as they are.
So yeah, having somewhere that you can come home and relax and call your own, would be
perfect.