First-home buyers with small deposit get price cap increase, as new financial year brings more incentive changes

Tens of thousands of first-home buyers and single parents will be able to get onto the property ladder with a smaller deposit or at a higher price point from Thursday, when 30,000 new spots are released across three government loan schemes.

First-home buyers and single parents will be able to purchase properties worth up to $800,000 with deposits as low as 5 per cent and 2 per cent respectively, under newly increased price caps for new spots with the First Home Loan Deposit Scheme and the new Family Home Guarantee.

It is among a string of changes on buyers’ radar for this financial year, including the pullback of incentives for first-home buyers in some states and territories, with the price cap increases set to help buyers trying to get into a soaring housing market.

Nationally, from July 1, first-home buyers can access 10,000 more spots in the federal government’s loan deposit scheme for existing homes at a higher price, and an additional 10,000 spots for new homes – which will remain capped at a maximum property price of $950,000 under the New Home Guarantee.

The first of 10,000 guarantees for single parents, to be rolled out over four financial years, will also become available from July 1.

Both NAB and Commonwealth Bank, the only major banks with access to the schemes, are expecting strong demand for the latest rollout, having already helped some 12,750 first-home buyers into the market in previous rounds.

Michael Baumann, executive general manager of home buying at Commonwealth Bank, expected a strong take-up of all three schemes, despite a more recent pullback in first-home buyer activity as property prices across the nation soar.

“Investors probably came into the market slightly strong over the last couple of months again, but we still have extremely strong demand from first-home buyers as well, even outside of these schemes,” he said. “I don’t believe that this will materially push the market into one or the other, but it will just give certain family groups — the opportunity to get into the market, as we have seen based on the research, up to five years earlier than they otherwise could.”

Mr Baumann expected the increased property price caps would prompt more first-home buyers to consider the scheme, and also felt there would be solid interest in the New Family Home Guarantee — noting some single parents had already been successful in purchasing under the existing first-home buyer schemes.

NAB is expecting demand to be just as strong as in prior rounds and is encouraging interested first-home buyers to get in quick – the first 5000 spots with the big banks were snapped up in just over a month last year.

Andy Kerr, NAB executive of home ownership, said the high price caps would provide greater flexibility for those looking to purchase their first home and opened the scheme up to more first-home buyers.

But, the increased price caps may not help many more first-home buyers in some markets. Mortgage Broker James Algar of Mortgage Choice Dee Why, on Sydney’s northern beaches, has had multiple inquiries about the schemes but has no clients rushing to take up spots in the latest rounds — with the region’s median unit price sitting at $990,000.

Still, he thought demand across the country would outweigh the supply of spots, and said he would not be surprised if the places available for existing properties with the big banks were gone by next week.

The start of the financial year will also bring about changes to stamp duty payments and first-home owner incentives in multiple states and territories. Among the changes are:

• In Victoria, the First Home Owners Grant for those in regional areas will halve from $20,000 to $10,000.
• A new premium stamp duty rate will kick in for properties sold for more than $2 million.
• Stamp duty discounts announced during the pandemic have now ended. A 50 per cent on discount on newly built homes worth up to $1 million was available until the end of June, as was a 25 per cent discount for existing homes.
• The price cap for the off-the-plan concession for land transfer duty will increase to $1 million for home buyers, until June 30, 2023, up from $550,000 and $750,000 for first-home buyers.
• A 50 per cent land transfer concession will be offered to those buying a new residential property in the City of Melbourne local government area, for homes up to $1 million in value, until June 30, 2022. A full exemption is already available for new properties that have been unsold for 12 months or more.
• In the Northern Territory, buyers will no longer be eligible for the Territory Home Owner Discount, which saved buyers up to $18,601 on stamp duty when building or buying a new home, or vacant block, worth up to $650,000.
• Stamp duty reductions of up to $10,000 on homes valued up to $750,000 have also ceased, with the end of the Northern Territory’s Senior, Pensioner and Carer Concession.
• In the ACT, stamp duty will continue to be waived on off-the-plan apartments or townhouses worth up to $500,000, but stamp duty waivers on vacant residential blocks and duty concessions on off-the-plan dwellings worth up to $750,000 have not been extended past June 30.
• Rate hikes will resume after the government announced a rate freeze for thousands of Canberra home-owners last year, in a bid to cushion the economic fallout from COVID-19.
• Price caps on the pensioner duty concession scheme will be lifted. Stamp duty is now waived on properties worth up to $490,000, with concession on homes worth up to $642,000.
• In NSW, first-home buyers have just one month left to utilise the increased price caps for stamp duty relief on new homes and vacant land.