The National Housing Finance and Investment Corporation (NHFIC) has reported that 45,000 people ‘tapped’ into the federal government’s Home Guarantee Scheme in the 2023 financial year, the most since its inception four years ago.
The program’s three different types of guarantees make it possible for first-time buyers to avoid paying lenders’ mortgage insurance with as little as a 5% down payment. The federal government then guarantees the remaining sum needed for a 20% deposit, which is necessary to avoid having to pay the insurance.
The figures for the 2023 financial year mean that nearly one in three first home buyers needed access to the scheme to get into the housing market, up from one in seven in the previous year.
Factors behind the 2023 increase included a higher number of available scheme places and a more challenging home-buying environment.
“The broader macroeconomic environment with rapidly rising interest rates has substantially decreased mortgage serviceability with flow on effects for affordability and this has led to first home buyers relying more heavily on the scheme than in previous years”, NHFIC research head Hugh Hartigan said.
The Australian Housing Urban Research Institute (AHURI) released research last year found that the billions spent by governments to ‘help’ first home buyers into the market actually made housing affordability worse and increased inequality.
“These measures add to demand and hence to house prices”, AHURI noted, adding that “Australia stands out as it is overwhelmingly reliant on demand-side instruments and lacks a strategic framework”.
Sucking first home buyers into an inflated market is a way of pretending to do something about “housing affordability”, while actually making the situation worse.
Sadly, the Albanese Government is following the same old script used by previous Australian governments.
