The First Home Buyers Scheme: 2020
On January the first, 2020, the Federal Government is looking set to introduce its promised (and somewhat controversial) first home owners scheme. This scheme will allow up to 10,000 prospective first time home buyers per year a significant leg up towards their home ownership.
Whereas currently a 10-20% deposit is the norm for applying for a mortgage, the scheme will gaurantor buyers for all but 5% of a deposit. To put that in context, a deposit for a $400,000 starter home will require a (mere) $20,000 deposit rather than $40k or more. In addition, with interest rates at an all time low for the foreseeable future, there may be no better time to buy.
Whilst definitely better than nothing, the scheme has however been criticised for a number of reasons. Firstly, as it operates on a first-come-first-served basis, it will naturally favour better organised applicants and, as 2020 will be the first time it operates, there is an expectation the annual quota will be used up very quickly. Cameron Kusher, writing for The Real Estate Conversation, claims that there has been over 100,000 first home buyers per annum over the last few years. If this trend continues into the future, only 10% of those eligible will be able to access the scheme per year. One would hate to have been 10,001 on the list!