EFFIE BATEMAN | Lifestyle | Contact
In some heartwarming news, the Labor government has promised their new ‘Help to Buy’ scheme will not have the same result as the 2008 financial crisis, which was partly due to lenders allowing low to middle income people to over borrow on their mortgages.
A similar scheme in the UK that cost the government billions of dollars and pushed up house prices ended just last year, after a decade of action. In fact, research conducted by the London School of Economics showed that ‘Help to Buy’ increased house prices in London by 8%, and boosted developers’ revenues by 57% in the process.
Further valuation of the policy showed that only two in five ‘help to buy’ recipients actually needed the programme to purchase a home and that a majority just used the subsidy to buy more expensive properties than they could have originally afforded.
The Australian help to buy scheme has come one bit further than the UK one, which allowed people to borrow using 5% deposit, by allowing people to sign up for a mortgage with as little as 2% house deposit – with the government providing a 40% loan for new home build, and 30% for an existing one.
The government will then own that portion of your home.
To qualify, applicants must make under $90,000 on a single income, or no more than $120,000 as a couple. If a person or couple exceeds that income after applying for a loan, they will have to pay back some of the government’s portion.
The property price cap is limited to $600k in the Northern Territory, South Australia, Western Australia, and Tasmania, $700k for Queensland, $750,000 for the ACT, $850k for Victoria, and $950k for New South Wales.
The scheme will be available for 40,000 Australians over four years.
It’s also noted that the commonwealth will recalculate the arrangement’s numbers every year, which means if your income or home value changes, the government adjust its share of the dwelling or even terminate the arrangement.
However Prime Minister Anthony Albanese has defended the scheme, by insisting that it’s not just his way of making it look like he’s doing something about the housing crisis, while avoiding decisions that would actually provide longterm solutions for everyday Australians.
More to come.
