John McGrath – More buyers using government-guaranteed loans

One in three Australians who bought their first homes in FY24 did so with the help of the Federal Government’s Home Guarantee Scheme.

A rising number of buyers are taking advantage of the scheme and more of them are purchasing with a partner, friends or family members, according to Housing Australia’s annual report.

The scheme comprises the First Home Guarantee, the Regional First Home Buyer Guarantee and the Family Home Guarantee.

In FY24, 35,000 places were offered under the First Home Guarantee plus another 10,000 places under the regional program. Both allow first home buyers to purchase a home with a 5% deposit.

The report shows 33,250 of the 35,000 First Home Guarantee places were taken up and 9,400 of the 10,000 regional places were also taken up. Single First Home Guarantee recipients were typically aged 25 to 29 years old and were earning a median $85,000 income per year. Their median purchase price was $482,000.

Couples and other joint borrower recipients were typically aged 30 to 34 years with a median income of $134,000. Their median purchase price was $624,000. Buyers participating in the regional program had a median age of 25 to 29 years and earned a median income of $78,000 for singles and $126,000 for joint borrowers. Single buyers purchased at a median price of $390,000 and joint borrowers spent a median of $520,000 on their first home.

The Family Home Guarantee allows single parents and legal guardians with dependents to purchase a home with a 2% deposit. In FY24, 5,000 places were offered and 1,250 were taken up.

The typical profile of Family Home Guarantee recipients was 35 to 39 years with a median income of $79,000. Their median purchase price was $425,000. The scheme's eligibility criteria was expanded in FY24. It’s no longer limited to first home buyers or singles and couples, and plenty of people took advantage of this new help available to them.

This included 13,900 overseas-born permanent residents who are now eligible for the scheme; 1,600 buyers purchasing with siblings, other family members or friends; 800 people who had owned property previously but not in the past 10 years; and 100 legal guardians.

The most guarantees were issued in Victoria, followed by Queensland and Western Australia.

This is interesting because over FY24, Melbourne and regional Victoria were among the weakest capital city and regional markets, while Brisbane and regional Queensland and Perth and regional Western Australia recorded very strong price growth.

This suggests many first home buyers in Victoria rightly saw a great window of opportunity and were inspired to act, taking advantage of both the scheme’s help and softer prices to buy their first home.

Those in Queensland and Western Australia may have used the scheme more out of necessity, given rapidly rising prices would have made it hard to maintain savings at a level high enough for a deposit.

On the East Coast, some of the most popular markets for first home buyers using the scheme included Ipswich and Logan-Beaudesert in Queensland, Parramatta in Sydney, and Melbourne's west and south-east districts.

In this climate of higher interest rates, it’s especially important to canvas all the help available to you to buy a home. Many state governments also offer stamp duty concessions and grants – and like the newly-expanded Home Guarantee Scheme – some are no longer limited to first home buyers.