The Property Council of Australia has praised the Coalition’s announcement of a First Home Loan Deposit Scheme, saying it will deliver some "welcome assistance" for those looking to enter the market.
Prime Minister Scott Morrison unveiled the scheme at the Liberal Party campaign launch on Sunday, committing $500 million for the National Housing and Investment Corporation to guarantee a portion of the home loans for single applicants earning up to $125,000, or couples with combined incomes of $200,000.
Available from January 1, the scheme would be capped at 10,000 loans a year and will be subject to limits on the values of the properties.
First Home Loan Deposit Scheme - At a glance
The program is available for single applicants earning up to $125,000, or couples with combined incomes of $200,000.
According to the Coalition, the First Home Loan Deposit Scheme will mean first home buyers won’t need to save for a full 20 per cent deposit, meaning they can enter the property market faster.
The value of homes that can be purchased under the Scheme will be determined on a regional basis.
Property Council Chief Executive Ken Morrison said it was a "smart" proposal that would provide some confidence for the housing construction sector.
“It will deliver some welcome assistance for aspiring first home buyers who have been confronted by the ever-increasing size of the deposit required to buy a home as the market has risen in recent years,” he said.
“Notwithstanding the current downturn, housing prices have risen much faster than average incomes, making it an increasingly tough challenge to save for a deposit, especially for first home buyers.
“This isn’t a hand-out but a hand-up for first home buyers.
"They will still be required to be approved for loans and be able to repay them, but it should make it easier for first home buyers to take their first step towards home ownership by getting over that big deposit hurdle."
Mr Morrison said that with the appropriate controls and means testing in place, this scheme should enable more first home buyers to engage in the market without adversely impacting on prices.
“It will also potentially be an additional stimulus for new housing construction which is one of the big engines of the economy and which has been looking at a significant downturn in activity," he said.
“This scheme will help drive new housing projects once the current construction pipeline dries up, supporting jobs and housing supply.
"The Property Council looks forward to working with the Coalition should it win next weekend’s election on the implementation of its proposal."
The scheme has also received support from the Real Estate Institute of Australia, with President Adrian Kelly describing the policy as a "timely boost".
"This addresses two hurdles facing first home buyers – the deposit gap and transaction costs which include mortgage insurance – in a practical way," he said.
“The last time the Federal Government introduced a special measure for first home buyers was the First Home Buyers Boost during the GFC.
"This measure saw first home buyers, as a percentage of total loans financed, increase from 20.2 per cent in October 2008 to 31.4 per cent in May 2009."
Labor has since said they will match the scheme if they are elected this Saturday.