Massive surge in investor and downsizer buyers jumping into $10,000 deposit property scheme

Home buyers are flocking to join a scheme that enables them to buy a new property with a deposit of just $10,000, with the number of housing projects that offer the option expected to more than double by the end of this year.

While the idea was developed by proptech company Coposit to help first-home buyers into the market by providing them with a savings-plan app to raise the remainder of the deposit during construction, it’s now attracting a huge number of investors and downsizers.

“It just made good sense for us,” says horse stud manager Robert Petith. He and his wife, Lucy, have just bought a two-bedroom apartment in The Residences at Wahroonga Estate off the plan as an investment.

“To me, it’s an exciting opportunity where you can pay most of the deposit off while it’s being built. You’re just paying in weekly instalments, so you don’t need to take the money from anything else. You have the whole build period to save that deposit.”

Coposit has just raised another $14 million from the Commonwealth Bank to offer funds to more buyers, and while it has over 100 projects from developers that now qualify, it is forecasting that figure will rise to 210 by the end of the year.

The scheme was officially launched in 2021 after co-founder and chief executive Chris Ferris, formerly a developer himself, saw the need to help more first-home buyers into the property market without having to save for years to raise the deposit. It also meant more developers were guaranteed sales, giving them the confidence to launch more projects.

On a property valued at $750,000, for instance, a deposit of $75,000 would normally be needed – which could take the average buyer six years to raise. With Coposit, they would put down $10,000 and then put in $625 a week for the average 104 weeks of a new build to come up with the same sum.

Jim Hunter, the executive director of Capital Corporation, which is building the 132-apartment low-rise complex The Residences, says it is a scheme he had been monitoring for two years before deciding to join.

“I think, morally, the right thing for people to be doing is helping people get into the property market,” he says. “It’s usually very hard for them to get in, especially first-home buyers, as a deposit takes a long time to save for, but this really helps them pay down a deposit over time, as the build progresses.

“When we introduced it for our The Residences project, we thought maybe 5 per cent, 10 per cent, or, at tops, 15 per cent of our buyers would do this. But when I looked at the data, I was shocked. Around 25 per cent of our buyers elected to go through with Coposit.”

While some were first-home buyers, many were downsizers, wanting to buy with a minimal deposit so they didn’t have to sell their big family home in a rush, and investors, like the Petiths, who preferred to use most of their existing savings for other things.

According to Hunter, every developer in the country will want to sign up to Coposit, which would give it the same kind of acceptance as Afterpay in the retail industry.

That’s something Ferris would love to see for his company, which is supported by a number of large off-the-plan lenders, including CommBank, Qualitas and Wingate, and has around $9 billion in projects.

“When we began, up to 70 per cent of our customers were first-home buyers, but that’s come down to about 30 per cent now,” he says. “Downsizers who are cash-poor but asset-rich make up probably around 10 per cent, and investors are absolutely coming back into the market and using this.

“We now have every type of buyer for new property in NSW, Victoria, Queensland and the ACT, and from the age of 20 to 71. It means you need much less at the beginning to buy. Our platform is good for buyers, it’s good for renters with more investors buying, and it’s good for developers selling.”

Petith says the couple had previously bought an investment apartment at Capital Corporation’s Woolooware Bay development in Sydney’s south and had been so impressed with the quality, they wanted to buy something else.

“I follow the projects they do quite closely, and when this one came up, I was pretty impressed,” he says of The Residences, which is close to Coups Creek bushland and Lane Cove National Park. “And then the opportunity to buy with a deposit of just $10,000 worked well for us. It made it all an easy process.”