1y ago

The federal government will offer some people the chance to buy a home with a 2pc deposit. Here's how it works

www.abc.net.au The federal government will offer some people the chance to buy a home with a 2pc deposit. Here's how it works

Labor has reactivated its Help to Buy scheme, which means you can move into a "home" with just a 2 per cent deposit.

Labor has reactivated its Help to Buy scheme, which means you can move into a "home" with just a 2 per cent deposit.

It is what's known as a "shared equity scheme" and was part of the 2022 federal government election commitment.

It means you can co-buy a home, with the government offering a helping hand.

The scheme will give people an "equity contribution" of up to 40 per cent of the cost of a new home, or 30 per cent for existing homes.

It can be a house, unit or townhouse.

The buyer won't need to pay rent on the stake owned by the government.

But you will have to pay a component of any capital gain back to the government.

The capital gains will be calculated in reference to the size of the government's equity share in the property.

For example, if the government holds a 30 per cent share in the property, then it would be entitled to 30 per cent of the proceeds of sale, which includes 30 per cent of any capital gains earned.

Seems like an interesting idea, though I get the feeling this is just going to keep inflating property prices right? It's not doing anything to address the increased cost of housing, just helping more people enter the overpriced market.

24 comments

Does not fix supply only makes it worse and drives up housing prices more. As good as these idea's are they just make the problem worse.
- I believe that's the point.
  
  They'll never attack the cause, because that hurts the pocketbooks of those making the decisions
- Gotta keep that housing ponzi going.

Traditionally and ideally, Homebuyers go to the bank with 20% deposit. With 4 bedroom homes costing $1 Million these days, that's $200k. People don't have $200k, that's a problem to be sure.
The proposed solution is to help people who have saved $20k to get into the market. I like that the government is trying to help people get into the market.
I would prefer solutions that lead to houses being cheaper. This solution won't do that. In fact, by making it easier to buy a house at present prices, the government is increasing demand - and therefore house prices. What if instead of increasing demand, the government increased supply? I'm no economist, but if the supply of a product raises to meet demand, prices for that product fall.
- I wish it was just $200k in your example, the fees and taxes add 20 to 50k depending on your situation
- You're going to need closer to $300,000 in hand for the $1m house to avoid LMI, don't ask how I know... 😞
- What if instead of increasing demand, the government increased supply?
  Eh - I don't think this will drive demand up much. 600,000 homes were bought last year in Australia. This scheme is only available to 10k buyers per year.
  Also, it's not a new scheme, it's a modification to an existing one. I bought my home a few years ago under it... the modified scheme is a little more generous but I don't think it will move the needle on house prices, but for those 10k lucky families per year it will definitely move the needle.
  Owning our own home has been life changing for us.
  Also - it could be argued that raising the value of homes will increase supply. It'll incentivise more people to build, and therefore more homes will be built.

The housing policy we’ve seen from Labor has been disastrously bad.
A refusal to invest in public housing, instead intending to repeat the “social and affordable” model that has already been a dismal failure in Victoria. …well, unless you’re a housing developer.
Housing targets that focus on commercial builds while we’ve 40+ years of public housing deficit in every state and territory.
And now this which sees people entering into loans they’d otherwise be told they can’t afford and literally sees the government invested in continuing capital growth of real estate prices for decades to come when the policies we need, properly implemented, would diminish or even end that growth.
- The Housing Future Fund is the type of dogshit policy that you would expect from an LNP government.
  
  They're Liberals wearing red at this point...

The same shit from governments everywhere.
Fix housing or draw 25 bullshit policies.
- Reverse!

This is the best summary I could come up with:
The scheme will run for four years, beginning some time in 2024, and support 40,000 low- and middle-income families to finally secure a place to call home.
Making the announcement this week at the Labor Party's national conference in Brisbane, Prime Minister Anthony Albanese said:
Director of Economic Research at REA Group Cameron Kusher said: "Taxpayer-wise, it is basically a free loan that is being given to help people get into the market."
Cameron Kusher said there's a risk: if property prices drop, the purchaser could end up owing the government more than what they borrowed.
If your income exceeds the annual threshold for two years in a row, you may need to repay the government's contribution — in part or in full.
All Australian states and territories agreed at the cabinet meeting to pass legislation this year, to implement the scheme.
I'm a bot and I'm open source!

Western Australia has been doing this for well over a decade. Like every large purchase you need to review the details of the contract. I have seen people do really well out of it and others not well at all when it comes to selling the property.

This is the equivalent of adding an extra lane to a highway. It will add very temporary relief, then back to the same old same old. This government doesn't have an interest in making housing more affordable.

I see this as a way for the government to earn a quick dollar and de facto get into the housing market.
When the owner buys back the share I doubt it will be calculated at the price the person bought it for. It would be at the market price at the time of the buyback.
I guess it works both ways too? I can see someone buying the minimum 2 percent and if they get something like opal or mascot towers when they sell at a loss the government is the one that loses out. So I can see it as a way to transfer the risk to the government and live in a place without having to pay rent.

Here’s how it works: Pop!

I actually might go for this... I might actually be able to live with my partner.

Does the 2pc have to be dark or white meat? Asking for a friend.
- It's an arm AND a leg, silly. Not or.
  
  I'm a breast and thigh kinda guy.

24 comments