By Graeme Salt
In news that surprises nobody, prices on properties suitable to the government’s First Home Guarantee Scheme have risen sharper than the rest of the property market.
Research by the Australian Financial Review and Cotality showed that, across the country, 89 per cent of locations saw above average growth in the first home buyer segment.
Properties priced under $1.5 million in Sydney, under $1 million in Brisbane and Canberra, and $950,000 in Melbourne are eligible under the expanded scheme, which The price cap is set at $900,000 in Adelaide, $850,000 in Perth and $700,000 in Hobart.
Since the scheme was expanded, nine out of 10 locations have seen higher growth in properties qualifying for the government scheme.
Most property purchases require a 20 per cent deposit, but those made under the government scheme need only 5 per cent.
According to the Australian Financial Review, a credit bureau that tracks borrowings said its data showed demand from first home buyers looking for loans of less than $1 million increased by 55 per cent after the announcement in August. The number of borrowing requests rose 12 per cent across the December quarter.
Many of my clients have rushed to get purchase their property before the expanded government scheme kicked in. But, prices are likely to rise for some time to come.
But, not all first home buyers need the scheme and there is now probably better value for properties just above the government’s price caps.
Rather than using the government’s guarantee, many of my clients are choosing a parental guarantee which is not necessarily limited to certain price bands.
If you are a first home buyer and want to know how the government’s guarantee scheme works, please message me.
Equally, if you want to know how parental guarantees work – so you may not be facing the same stiff competition from other would-be buyers, please message me too.
Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation on your home loan needs, please contact him on 02 9922 5055.
