Latest news with #FirstHomeGuarantee
Perth Now
2 days ago
- Business
- Perth Now
The Perth suburbs where units could be your way onto property ladder
Perth's extraordinarily high rental prices make it cheaper to buy units than rent them in nearly 30 suburbs across the metropolitan area. But the catch is, you need a 20 per cent deposit to buy the apartments. The research highlights how high lease costs are keeping a third of the population stuck in the rent trap, paying off a landlord's mortgage — instead of their own — while they struggle to save the required deposit. President of the Real Estate Institute of WA Suzanne Brown acknowledged the odds are stacked against renters. 'It should always be your goal to exit the rental market — whatever that looks like,' she said. 'Perhaps that is buying something you can afford and renting somewhere you want to live. But buying should always be the long run focus.' Ms Brown said renters should not give up, as she regularly saw examples of people who saved a 20 per cent deposit, sometimes in challenging circumstances. Furthermore, major help was coming for first-home buyers through the First Home Guarantee, which will help eligible buyers to purchase with as little as a five per cent deposit without paying costly lender's mortgage insurance. Research by the Real Estate Institute of WA shows 28 suburbs have median unit rents that are higher than weekly mortgage repayments at 6.05 per cent interest over 30 years. Bayswater, Burswood, Beckenham, Perth and Cannington have the highest rental income versus mortgage cost differential. In Burswood, there is almost a $1000 monthly difference between median mortgage repayments ($2737 per month) and median rental income ($3683 per month). While the REIWA research does not include water, council rates and strata fees, separate research by The West Australian shows it is often still cheaper to buy than rent once these costs are included. A two-bedroom city apartment on Murray St, for example, sold for $518,000 in mid May. With a 20 per cent deposit, the owner pays $575 a week to repay the $414,000 loan over 30 years. Water and council rates, and the strata levy, comes to an additional $103 a weekly, leaving the home owner $678 a week out of pocket. An apartment in this city complex sold for $518,000 in mid May and advertised as a rental two weeks later for $725 a week, making it cheaper to buy than rent. The catch is, you have a deposit. Credit: supplied But the very same apartment has this week been advertised as an unfurnished rental property, on a six-month lease, for $725 a week, leaving the home-owner positively geared from day one, nearly $50 a week in the red. In another example, a two-bedroom, two-bathroom apartment in Bayswater sold for $540,000 in October. Buyers would need a hefty $108,000 deposit to buy it, and repay $600 a week for 30 years under 6.05 per cent interest. A further $35 a week is required for the strata fees, and $59 is required each week for council and water rates. With total weekly costs at $694, the owner is still ahead, given an almost identical apartment around the corner is renting for $740 a week. This two by two Bayswater apartment sold for $540,000 in October 2024. Credit: supplied Another examples includes a modern complex in Burswood, which is currently advertising a one-bedroom apartment, with parking space, for $650 a week rent. However, the neighbouring one-bedroom apartment sold in mid May for $465,000. With a 20 per cent deposit ($93,000) a mortgage- holder would repay about $520 a week for 30 years. An extra $94 is required each week to pay water rates, council rates, strata levies and a special deck levy. With total costs at $614 a week, the owner is still ahead. 'Units are a more affordable entry point to the market than houses, particularly in areas closer to the city and lifestyle attractions, and can be good options for people looking to exit the rental market,' said Ms Brown. This one bedroom unit in this Burswood complex sold recently for $465k. Credit: supplied 'Currently capital growth for the broader unit market is on par with the housing market, driven by the strong demand for property. 'In general though, the rate of growth for apartments — in particular — does tend to be lower than for houses. But that is not often a significant factor for people looking to buy their first home. 'For investors, the unit market usually outperforms the housing market for yield. '
West Australian
6 days ago
- Business
- West Australian
‘Stop giving concessions': Major warning on first-home handouts
Potential first-home buyers are falling further behind due to the very schemes designed to get them into a home. Independent economist Saul Eslake said the best thing the government could do to help first-home buyers would be to remove concessions that allow them to buy a home. 'The question isn't what they should be doing, it's what they should not be doing,' he told NewsWire. 'What they have to stop doing is things that needlessly inflate demand for housing. 'Stop giving out what I call second-home vendor grants as I call them because that is where the money ends up.' 'Stop giving stamp duty concessions, all they do is allow people to pay the vendor what they would have paid to the state government and back away from the mortgage deposit guarantee schemes and shared equity schemes,' he said. Mr Eslake said these policies, which are designed to help first-home buyers, simply end up inflating house prices. 'While a shared equity scheme sounds like a good idea, in practice, if you're willing to buy a $400,000 house and the government says 'hey, we will give you 20 per cent', then buyers say 'oh good, I can now afford a $500,000 house'. 'So a $400,000 house becomes a $500,000 house, so it's more a matter of just stop needlessly inflating demand.' One of the key election policies the Albanese government ran on was its expansion of the First Home Guarantee scheme, which is sometimes called the 5 per cent deposit scheme. This program allows first-home buyers to purchase property with a deposit as little as 5 per cent, with the government effectively guaranteeing the other 15 per cent, allowing first-home buyers to avoid paying lenders' mortgage insurance. But in an updated version of the scheme to come into effect at the start of 2026, caps of $125,000 for singles and $200,000 for couples will be removed. The PropTrack April Home Price Index showed national house prices hit a new record high over the month of April, increasing by 0.2 per cent monthly or 3.7 per cent compared with the same time last year. Australia's Cash Rate 2022 Helia chief executive and managing director Pauline Blight-Johnston said the main risk to the latest policy was the removal of the income caps to get government help. 'Our belief is that we will achieve the most as an economy if the government help is directed towards those that need it the most, and those that are able to help themselves through private enterprise do so without the taxpayers' dollar,' she told NewsWire. 'At the end of the day, our view is that taxpayers' dollars should go to those that really need the help to get into the market, such as essential workers or others that are really struggling.' Ms Blight-Johnston said expanding the HGS didn't address the fundamental underlying issue for those struggling to buy their first home – a shortage of affordable supply. She fears that the government's housing schemes just worsen housing affordability by fuelling demand and driving up prices. Instead, she pointed to first-home buyers using lenders' mortgage insurance as a 'really powerful tool' that is often misunderstood. 'People think of it as a fee …. But if you think of it differently as a wealth creation tool and it allows you to get into a home earlier, on average people that use LMI get in around nine years earlier and around $100,000 better off after five years because they got into the market earlier,' she said. Ms Blight Johnston said mortgage holders would typically pay 1 to 2 per cent as a premium above their usual repayments if they took on LMI. 'If you think property goes up on average 4 or maybe 5 per cent a year, if it is going to take you more than six months to save the deposit, the extra 15 per cent — as LMI takes the deposit down from 20 to 5 per cent – you're going to be ahead by getting into the market earlier and paying the premium.' Mr Eslake said LMI could increase demand for property if it acted like a reduction in interest rates. 'We know whenever interest rates go down, people borrow more and pay more for the house they buy which results in higher prices,' he said.
Perth Now
6 days ago
- Business
- Perth Now
‘Just stop': Surprise act hurting homebuyers
Potential first-home buyers are falling further behind due to the very schemes designed to get them into a home. Independent economist Saul Eslake said the best thing the government could do to help first-home buyers would be to remove concessions that allow them to buy a home. 'The question isn't what they should be doing, it's what they should not be doing,' he told NewsWire. 'What they have to stop doing is things that needlessly inflate demand for housing. 'Stop giving out what I call second-home vendor grants as I call them because that is where the money ends up.' Australia's housing market has almost instantly reacted to interest rate cuts. NewsWire/ Nadir Kinani Credit: News Corp Australia 'Stop giving stamp duty concessions, all they do is allow people to pay the vendor what they would have paid to the state government and back away from the mortgage deposit guarantee schemes and shared equity schemes,' he said. Mr Eslake said these policies, which are designed to help first-home buyers, simply end up inflating house prices. 'While a shared equity scheme sounds like a good idea, in practice, if you're willing to buy a $400,000 house and the government says 'hey, we will give you 20 per cent', then buyers say 'oh good, I can now afford a $500,000 house'. 'So a $400,000 house becomes a $500,000 house, so it's more a matter of just stop needlessly inflating demand.' One of the key election policies the Albanese government ran on was its expansion of the First Home Guarantee scheme, which is sometimes called the 5 per cent deposit scheme. This program allows first-home buyers to purchase property with a deposit as little as 5 per cent, with the government effectively guaranteeing the other 15 per cent, allowing first-home buyers to avoid paying lenders' mortgage insurance. But in an updated version of the scheme to come into effect at the start of 2026, caps of $125,000 for singles and $200,000 for couples will be removed. The PropTrack April Home Price Index showed national house prices hit a new record high over the month of April, increasing by 0.2 per cent monthly or 3.7 per cent compared with the same time last year. Australia's Cash Rate 2022 Helia chief executive and managing director Pauline Blight-Johnston said the main risk to the latest policy was the removal of the income caps to get government help. 'Our belief is that we will achieve the most as an economy if the government help is directed towards those that need it the most, and those that are able to help themselves through private enterprise do so without the taxpayers' dollar,' she told NewsWire. 'At the end of the day, our view is that taxpayers' dollars should go to those that really need the help to get into the market, such as essential workers or others that are really struggling.' Ms Blight-Johnston said expanding the HGS didn't address the fundamental underlying issue for those struggling to buy their first home – a shortage of affordable supply. She fears that the government's housing schemes just worsen housing affordability by fuelling demand and driving up prices. As Australian house prices hit record highs for a fifth consecutive month, it is harder for first-home buyers to get into the market. NewsWire/ Gaye Gerard Credit: News Corp Australia Instead, she pointed to first-home buyers using lenders' mortgage insurance as a 'really powerful tool' that is often misunderstood. 'People think of it as a fee …. But if you think of it differently as a wealth creation tool and it allows you to get into a home earlier, on average people that use LMI get in around nine years earlier and around $100,000 better off after five years because they got into the market earlier,' she said. Ms Blight Johnston said mortgage holders would typically pay 1 to 2 per cent as a premium above their usual repayments if they took on LMI. 'If you think property goes up on average 4 or maybe 5 per cent a year, if it is going to take you more than six months to save the deposit, the extra 15 per cent — as LMI takes the deposit down from 20 to 5 per cent – you're going to be ahead by getting into the market earlier and paying the premium.' Mr Eslake said LMI could increase demand for property if it acted like a reduction in interest rates. 'We know whenever interest rates go down, people borrow more and pay more for the house they buy which results in higher prices,' he said.
News.com.au
6 days ago
- Business
- News.com.au
‘Stop giving concessions': Major warning on first-home handouts
Potential first-home buyers are falling further behind due to the very schemes designed to get them into a home. Independent economist Saul Eslake said the best thing the government could do to help first-home buyers would be to remove concessions that allow them to buy a home. 'The question isn't what they should be doing, it's what they should not be doing,' he told NewsWire. 'What they have to stop doing is things that needlessly inflate demand for housing. 'Stop giving out what I call second-home vendor grants as I call them because that is where the money ends up.' 'Stop giving stamp duty concessions, all they do is allow people to pay the vendor what they would have paid to the state government and back away from the mortgage deposit guarantee schemes and shared equity schemes,' he said. Mr Eslake said these policies, which are designed to help first-home buyers, simply end up inflating house prices. 'While a shared equity scheme sounds like a good idea, in practice, if you're willing to buy a $400,000 house and the government says 'hey, we will give you 20 per cent', then buyers say 'oh good, I can now afford a $500,000 house'. 'So a $400,000 house becomes a $500,000 house, so it's more a matter of just stop needlessly inflating demand.' One of the key election policies the Albanese government ran on was its expansion of the First Home Guarantee scheme, which is sometimes called the 5 per cent deposit scheme. This program allows first-home buyers to purchase property with a deposit as little as 5 per cent, with the government effectively guaranteeing the other 15 per cent, allowing first-home buyers to avoid paying lenders' mortgage insurance. But in an updated version of the scheme to come into effect at the start of 2026, caps of $125,000 for singles and $200,000 for couples will be removed. The PropTrack April Home Price Index showed national house prices hit a new record high over the month of April, increasing by 0.2 per cent monthly or 3.7 per cent compared with the same time last year. Helia chief executive and managing director Pauline Blight-Johnston said the main risk to the latest policy was the removal of the income caps to get government help. 'Our belief is that we will achieve the most as an economy if the government help is directed towards those that need it the most, and those that are able to help themselves through private enterprise do so without the taxpayers' dollar,' she told NewsWire. 'At the end of the day, our view is that taxpayers' dollars should go to those that really need the help to get into the market, such as essential workers or others that are really struggling.' Ms Blight-Johnston said expanding the HGS didn't address the fundamental underlying issue for those struggling to buy their first home – a shortage of affordable supply. She fears that the government's housing schemes just worsen housing affordability by fuelling demand and driving up prices. Instead, she pointed to first-home buyers using lenders' mortgage insurance as a 'really powerful tool' that is often misunderstood. 'People think of it as a fee …. But if you think of it differently as a wealth creation tool and it allows you to get into a home earlier, on average people that use LMI get in around nine years earlier and around $100,000 better off after five years because they got into the market earlier,' she said. Ms Blight Johnston said mortgage holders would typically pay 1 to 2 per cent as a premium above their usual repayments if they took on LMI. 'If you think property goes up on average 4 or maybe 5 per cent a year, if it is going to take you more than six months to save the deposit, the extra 15 per cent — as LMI takes the deposit down from 20 to 5 per cent – you're going to be ahead by getting into the market earlier and paying the premium.' Mr Eslake said LMI could increase demand for property if it acted like a reduction in interest rates. 'We know whenever interest rates go down, people borrow more and pay more for the house they buy which results in higher prices,' he said.
West Australian
25-05-2025
- Business
- West Australian
Smart planning needed and government incentives available to help you step into the property market
While strong price growth over the past couple of years has made buying your first home more challenging, Real Estate Institute of Western Australia (REIWA) President Suzanne Brown said it was still achievable but might require some compromises. 'First homebuyers remain very active in the WA market, with data from the Australian Bureau of Statistics showing first-time homeowners made up 37.7 per cent of all owner-occupier loans in 2024,' she said. 'However, many have had to reassess their expectations, potentially shifting their focus from houses to more affordable options like units, villas or townhouses to get into the market. 'They're also needing to broaden their search to suburbs further from the Perth CBD, where prices tend to be lower. 'Currently, suburbs in Perth's south-east and south-west, along with Midland to the east, are the most affordable suburbs for houses. 'For people looking to be closer to the city, units in Wembley and Bayswater offer affordable opportunities.' Ms Brown encouraged first homebuyers to do their research thoroughly and to not be deterred by median house prices when considering where to buy. 'It is important to remember the median is the middle, and 50 per cent of sales will be below this price,' she said. 'There will still be affordable options in many suburbs – it may just take time and patience to find them in some areas. 'If your preferred suburb is out of your price range, look at neighbouring areas, which are sometimes called bridesmaid suburbs. 'They will be close to the same amenities you find desirable but are usually more affordable. 'I also remind first homebuyers their first house is often a stepping stone along the homeownership path not the final destination. 'Buy what you can afford, pay down the mortgage, and build some equity and upgrade later.' Ms Brown said saving a deposit was one of the greatest challenges facing first homebuyers, particularly in a climate of rising prices. She encouraged them to start saving as soon as possible and to make use of government schemes to help them build a deposit and get a loan. 'The Federal Government's first home super saver scheme lets first homebuyers save a deposit through their superannuation,' Ms Brown said. 'You can apply to withdraw a maximum of $15,000 of your voluntary superannuation contributions from any one financial year to buy your first home. 'Across all years, the maximum amount you can withdraw is $50,000 of personal contributions, plus earnings. 'First homebuyers should also know you don't need to have a 20 per cent deposit to get a loan. 'However, if you have less than 20 per cent, you will have to pay lenders mortgage insurance (LMI).' Ms Brown said there were further government schemes addressing this. 'Keystart is a State Government initiative allowing eligible buyers to get a loan with as little as a two per cent deposit and pay no LMI,' she said. 'The Federal Government's First Home Guarantee scheme allows eligible buyers to access a loan with a five per cent deposit. 'The government guarantees the remaining 15 per cent, negating the requirement for LMI. 'The Federal Government is also expected to launch its Help to Buy shared equity scheme later this year. 'It will allow buyers to benefit from a smaller mortgage and lower repayments, with the government taking an equity share of up to 40 per cent of the purchase price of new homes and 30 per cent of the purchase price of existing homes.' Ms Brown said there were several other grants and measures, which could help first homebuyers get their foot on the property ladder. 'If you buy or build a new home, you may be eligible for the $10,000 First Home Owner Grant,' she said. 'First homebuyers may also qualify for a $2000 grant from the Home Buyer Assistance Account to help with the incidental costs of buying a home such as settlement fees. 'Stamp duty is another major challenge facing homebuyers, as it is an additional cost on top of saving for a deposit.' According to Ms Brown, earlier this year, 63 per cent of 15,000 respondents to a Housing Issues Survey on agreed stamp duty was a significant barrier to homeownership in WA. 'There are stamp duty concessions to help address this,' she said. 'If first homebuyers buy a home valued at $500,000 or less, they will pay no stamp duty, saving up to $18,000. 'They will pay a concessional rate on purchases valued up to $700,000 in the Perth metropolitan area and Peel region or up to $750,000 outside of these areas. 'REIWA has been advocating for these thresholds to be lifted for some time, and we were pleased when the State Government announced an increase in March. 'However, rising prices mean these changes could quickly become redundant. 'We would like the State Government to go a step further and link the thresholds to REIWA's median sale prices – as Keystart has done for its products – so they can move with the market and remain accessible to as many first homebuyers as possible.' Ms Brown offered some additional tips for first homebuyers. 'Visit a mortgage broker to get an accurate idea of how much you can borrow,' she said. 'Get your finance pre-approved and speak to the selling agent about what you can do to strengthen your offer. 'Consider using a buyer's agent and, lastly, leave plenty of time for settlement.' is the home of Western Australian real estate, representing more than 1350 member agencies or 90 per cent of the sector. With more than 100 years of industry leadership and local knowledge, it is uniquely placed to provide in-depth market intelligence free of charge.
