Federal Budget 2021: First-home buyer help only keeping up with price growth in some cities

First-home buyers could find themselves having to compromise when using the federal government’s low-deposit scheme, which has not kept pace with soaring property prices.

Offered since the start of 2020, the program helps address the deposit challenge by allowing first-time buyers to get into the market with savings as little as 5 per cent of the sticker price.

It is designed to allow the purchase of a modest home, under price caps that vary by location.

While housing prices have since soared to new record highs despite the pandemic recession, the price caps were not lifted in Tuesday night’s Federal Budget.

This could leave buyers searching further away from city centres, or for properties that are smaller or in need of more renovation work, to get into the market.

The First Home Loan Deposit Scheme will offer another 10,000 places from July 1, and there are similar programs targeted to single parents or first-home buyers purchasing new builds, which have higher price caps.

Sydney

Sydney buyers using the scheme face a price cap of $700,000, which would purchase a modest home indeed in a city where the median house price just ticked above $1.3 million.

The cheapest quartile of all houses in the city — often used as a benchmark for entry-level residences — now cuts out at $752,500, on Domain data.

In this lower bracket, house prices have risen 10.7 per cent over the year to March.

To find a house on land this cheaply, buyers would likely be looking far from the city centre.

Buyers looking for an apartment may have a little more luck.

The cheapest quartile for apartments tops out at $580,000, and prices for this bracket have edged down 3.3 per cent over the past year after the rise of remote working prompted a rush to bigger houses in the suburbs.

Melbourne

In the Victorian capital, first-home buyers can get in on a low deposit for houses worth up to $600,000.

It’s well below the city-wide median house price of about $974,000.

And it could be a challenge – the cheapest quartile of Melbourne houses now cuts off at $617,000, up 2.8 per cent over the past year.

A small apartment in the city that built plenty of them might be more in reach.

The cheapest quartile of units tops out at $435,000, up 1.2 per cent over the past year.

Brisbane

Further north, Brisbane buyers have a budget of $475,000 to use the First Home Loan Deposit Scheme.

This compares with a lowest quartile cut-off of $465,000 as of December 2020, the latest figures that are available for the Queensland capital.

Brisbane entry-level house prices have risen 6.5 per cent over the preceding 12 months.

Canberra

In the ACT’s booming property market, first-home buyers are limited to houses under $500,000 if using the low deposit scheme.

This is well below the cheapest quartile of houses, which now reaches to $675,000 – a bracket that has soared 16.4 per cent over the year to March.

Even the most affordable 5 per cent of houses in Canberra top out at $520,000, which could make it a struggle to find a house for less.

Buyers in the scheme might be largely restricted to apartments, with the cheapest quartile at just $385,000, only 1.3 per cent higher than a year ago.

Perth

Perth’s property market has been recovering but first-home buyers might not find themselves as squeezed as over east.

The scheme’s budget of $400,000 is close to the cheapest quartile of houses in the city, which cuts off at $391,000.

That’s a rise of 6 per cent over the past year.

The cheapest quartile of apartments are available under just $270,000, a 3.8 per cent rise in 12 months.

Adelaide

Adelaide first-home buyers are offered a $400,000 budget to use the low-deposit scheme.

It’s almost exactly the cut-off of the most affordable quartile of homes there, at $405,000 – although this is an 8.9 per cent price jump from a year ago.

Units are even cheaper, at $279,000 for an entry-level apartment, up 5.3 per cent in 12 months.