The Government has raised income caps and property price limits as part of the review of its shared equity Help to Buy Scheme, aimed at assisting first home buyers. On the 25th March, the Government released new income and property price limits as part of the overall budget announcements, and that’s not all the changes they are making, scheduled to take effect later in 2025. Under the scheme, eligible low to middle-income households would only need a 2 per cent deposit to qualify for a loan with participating lenders.
The new Help to Buy Scheme introduces several changes to make homeownership more accessible:
1. Income Thresholds:
The new scheme raises the maximum annual income caps for eligibility, allowing individuals and couples with higher incomes to participate.
*Income caps will lift from $90,000 to the new $100,000 limit for individuals and from $120,000 to the new limit of $160,000 for joint applicants and single parents for the scheme, as announced by Minister for Housing, Clare O’Neil, on Saturday, 22 March.
2. Property Price Caps:
The price limits for eligible properties have been increased to be more in line with the average house price in each state and territory, enabling buyers to choose from a broader range of homes. According to the Government, more than five million properties now fall under the new property price caps:
o NSW – capital city and regional centre $1,300,000
o NSW – other $800,000
o VIC – capital city and regional centre $950,000
o VIC – other $650,000
o QLD – capital city and regional centre $1,000,000
o QLD – other $700,000
o WA – capital city $850,000
o WA – other $600,000
o SA – capital city $900,000
o SA – other $500,000
o TAS – capital city $700,000
o TAS – other $550,000
o ACT $1,000,000
o Northern Territory $600,000
• Government Contribution: The government will contribute up to 40% of the purchase price for new homes and 30% for existing homes, compared to the previous scheme's structure.
• Repayment Terms: Participants will repay the government's equity share when selling the property or over time, with no rent or interest charged on the government's stake.
These updates aim to expand the scheme's reach and provide long-term relief to Australians struggling to enter the housing market, making homeownership a reality for many who previously found it out of reach.
You can find the full details of the Help to Buy scheme on their web page: https://www.abc.net.au/news/2025-03-21/labor-to-expand-help-to-buy-shared-equity-scheme-before-it-begin/105083546
It’s interesting to note that the government is also banning foreign buyers from purchasing existing homes for two years from 1 April 2025 to allow Australian citizens and residents more accessibility without the added competition factor from foreign investors.
The new changes to the Help to Buy Scheme are designed to significantly benefit first-time homebuyers:
• Easier Eligibility: With increased income thresholds, more first-time buyers can qualify for the scheme. For example, singles earning up to $100,000 and couples or
single parents earning up to $160,000 could now fall into the eligibility category.
• Broader Property Options: Higher property price caps mean buyers could access a wider range of homes. In Brisbane, for instance, the cap has been raised from
$700,000 to $1 million.
• Lower Financial Barriers: The government’s equity contribution (up to 40% for new homes and 30% for existing homes) reduces the size of the deposit and mortgage
required, making homeownership more attainable.
• Increased Housing Supply: The government’s investment in modular and prefabricated housing aims to speed up construction, potentially easing competition in
the housing market.
Some important points to remember:
• Limited Availability: The scheme is capped at 10,000 places annually, which might not meet the demand from aspiring buyers.
• Shared Ownership Complexities: Buyers won't fully own their homes, as the government retains a share. This means when selling, the government takes its
percentage of the sale price, which could limit profits.
• Maintenance Costs: Despite shared ownership, buyers are solely responsible for all repairs and maintenance. Any upgrades that increase the home's value also benefit
the government's share.
• Affordability Issues: Rising property prices in competitive markets may still make it difficult for buyers to find suitable homes within the scheme's price caps.
• Borrowing Constraints: Buyers must meet strict borrowing criteria, which could limit their ability to secure financing for properties even with government assistance.
These factors highlight the importance of careful planning and understanding the scheme's terms before committing.
Would you like advice on navigating these challenges?
Make an appointment with us at The Mortgage PA today to get yourself on track to home ownership.
