The Victorian Government has launched the $500 million Homebuyer Fund to assist about 3,000 people become home owners.
Under the Fund, the Victorian Government will become an equity partner and aspiring home owners will only need a 5% deposit.
Fund applicants will be subject to income thresholds, must be over 18 and must not already have an interest in a property.
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Victorian Treasurer Tim Pallas said it was becoming increasingly difficult for young people to get into the property market, saying many felt left behind as prices soared.
From The ABC:
“They’ll be able to buy homes with the help of the Victorian government, which will be an equity partner in the purchase,” Mr Pallas said…
In Melbourne and Geelong, the homes need to cost $950,000 or less, with the cap in the rest of the state at $600,000.
Recipients of the funding can then either buy out the state’s share in the home or give the same proportion of the value back the VHF when they sell.
“We will put that money back into the fund, so this will become self-sustaining in all likelihood, given the continuing and historical appreciation and value of assets over time,” Mr Pallas said…
The Real Estate Institute of Victoria welcomed “any support from government that assists more Victorians to enter and remain in the property market”.
“The Victorian Homebuyer Fund seems to be a sensible policy that will be particularly helpful to [first-time] entrants in the property market,'” REIV chief executive Gil King said.
This policy will obviously suck sub-prime buyers into Victoria’s property market, increase their ability to pay, and bid-up prices. In turn, its will make overall ‘housing affordability’ even worse. Hence why it is strongly supported by the Real Estate Institute of Victoria.
It is a policy based on politics rather than economics.