First home buyers and single parents in Tasmania can now purchase a property with just a 5 per cent deposit under the federal government’s expanded Home Guarantee Scheme.
The uncapped program removes income limits and applies to new builds, existing homes and apartments across the state.
Senator Richard Dowling said the barrier of a traditional 20 per cent deposit had pushed homeownership out of reach for young people.
He said houses now cost more than 10 times the average salary, compared to four times historically.
“You add that with a lender’s mortgage insurance stamp duty, the dream was becoming a bit of a fantasy,” he said.
“By bringing it down to just 5 per cent, that fantasy now becomes a dream once again for people.”
“Instead of paying someone else’s mortgage, they can start paying off their own mortgage.”
Dowling said the scheme addressed intergenerational inequity, saying young Tasmanians miss out on benefits their parents enjoyed like free university.
“We’re helping to get young people a roof over their head faster,” he said.
“We’re making it easier to save and they have to save less to get there in the first place.”
Tim Ribbons, CEO of Wilson Homes, Tasmania’s largest residential builder, welcomed the announcement.
He said rising costs of land, labour and materials over recent years had squeezed first home buyers out of the market.
“What this announcement does is it reduces the requirement of funds for those buyers to enter the market,” he said.
Ribbons said Tasmania’s building industry is about 600 permits short of its average over the past 12 months, with first home buyers making up a large portion of the decline.
“This announcement is really going to provide a positive reinforcement to those first home buyers to give them confidence to come into the market,” he said.
Wilson Homes has launched a product specifically targeting first home buyers and those using the scheme.
Ribbons said the company streamlined pre-construction requirements to help buyers move to site and into their homes sooner.
He also backed the National Economic Roundtable’s decision to pause aspects of the National Construction Code.
“All of those changes come with a financial cost to them and they really do put up barriers for particularly those first home buyers entering the housing market,” he said.
The scheme has no cap on the number of homes that can be accessed or income limits for applicants.
