First-home buyers across Australia will be receiving another boost as the federal government opens another 10,000 slots for the First Home Loan Deposit Scheme (FHLDS). However, a group raised some concerns about the implementation of the scheme’s expansion.
Michael Sukkar, minister for housing and assistant treasurer, announced that the 10,000 additional places for the scheme will be dedicated exclusively for buyers who are planning to purchase a newly-built home or construct a house. Under the scheme, would-be buyers will be provided a guarantee from the federal government, allowing them to apply for mortgage with as little as 5% deposit.
"The additional guarantees will be available until 30 June 2021 and will drive more construction and support jobs as part of our Economic Recovery Plan," Sukkar said in a statement.
The federal government initially opened 10,000 slots for the scheme at the start of the year. The scheme, was then expanded further by another 10,000 slots in the middle of the year.
"With some 20,000 first home buyers already accessing the Scheme in less than 12 months, it has certainly met and exceeded its primary objectives," said Graham Wolfe, managing director of the Housing Industry Association.
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Wolfe said the FHLDS addresses one of the biggest problems of home buyers, which is saving for a deposit to purchase their first home.
"The extra 10,000 places for new homes and apartments that the government has put into this scheme will ensure more first-home buyers achieve their goal of owning a home sooner," he said.
While the scheme expansion is welcomed by industry players, the Real Estate Institute of Australia raised some concerns, particularly about the scheme's targeted properties.
Adrian Kelly, president of REIA, said the expansion of the scheme seems to ignore the typical preference of first-home buyers when it comes to homes.
"Historically we have seen that less than 20% of Australian first home buyers buy new homes. Over 80% of Australian first home buyers purchase established dwellings. In more recent times even fewer small home buyers are choosing new dwelling," he said in a statement.
For many first-home buyers, the affordability of older dwellings is a crucial consideration when looking for a home to buy. Kelly said in general, first-home buyers go for established homes while investors and sellers purchase the new ones.
"It would have been far better to not limit the additional places to new builds in terms of the economic impacts and first home buyer preferences." Kelly said.