Government releases additional 1800 spots for existing property in First-Home Loan Deposit Scheme

An extra 1800 first-home buyers will be able to break into the property market sooner, after the government announced any unused spots from the first round of the First Home Loan Deposit Scheme would be reissued.

The extra spots in the First Home Loan Deposit Scheme, where first-home buyers can purchase an existing property with only a 5 per cent deposit, will be released in coming days.

Housing minister Michael Sukkar announced on Wednesday that the additional spots would be reissued after they were left unused by eligible buyers who accessed the federal government’s scheme in the first tranche released in January 2020.

The scheme was introduced in January 2020 to ease the deposit hurdle faced by first-home buyers,  allowing singles earning up to $125,000 and couples earning up to $200,000 to borrow up to 95 per cent of a property’s purchase price without having to pay lender’s mortgage insurance.

Properties had to be below set region-specific price thresholds, ranging from $700,000 for an existing property in Sydney, to $475,000 in Brisbane.

10,000 places were available nationwide for the scheme from January last year, and successful applicants had to find a property within 90 days of approval. It was highly popular, with 3000 places taken in the first week and half of the year.

Those 10,000 places were granted another 90-day extension on top of their original three months, given COVID lockdowns made property hunting difficult – but even still, nearly 1 in 5 of those places were left unused, a government spokesperson told Domain.

With the second round almost completely full within months of being released, the government added an additional 10,000 spots in October last year. However, those spots were restricted to buyers building or buying a new home. The scheme was no longer available to buyers wanting an existing property.

The take up of that extended scheme for new homes was slower, with just a tick over 4200 first-home buyers accessing a spot, government figures showed.

The extra spots for existing homes would be welcome news for first-home buyers in major east-coast cities where prices were rapidly rising and competition was rife, Domain senior research analyst Dr Nicola Powell said.

“Out of the volume of first-home buyers it is not going to make a massive difference, but any added spots will help,” Dr Powell said. “The market has moved against first-home buyers … that’s obviously a bigger hurdle for first-home buyers to get access.”