Thinking of buying with a friend? Where you can get on the property ladder, chipping in just $12,500 each

Living with mates, for many of us, is a rite of passage in early adulthood.

Paying rent, splitting the electricity bill, the Netflix password, the grocery shop; all of the grown-up things are shared and responsibility is learned, often with the people who also happen to be your favourite humans to hang out and laugh with.

Some friends are so good as housemates that they take that next step of buying together – and as of July 1 this year, it’s become a whole lot easier for that to happen.

By using the First Home Guarantee ( FHBG ) – which is part of the Home Guarantee Scheme – two buyers can purchase a property with a 5 per cent deposit without paying lender’s mortgage insurance. Typically, when purchasing a home, a buyer should have at least a 20 per cent deposit, which can take years to save. However, the FHBG offers the chance to save and enter the market quickly. 

Previously, the scheme only allowed first-time buyers to team up with a spouse, but now any two people can team up and step onto the property ladder together. This includes siblings, parents (if they haven’t owned property in the past 10 years) and friends.

According to the latest Domain House Price Report, over 100 suburbs across Australia’s capital cities have a median price of less than $500,000.

A 5 per cent deposit on a $500,000 property is $25,000. Between two friends (or siblings) that means each person needs to tip in just $12,500.

When it comes to finding a property at that price, units are more likely to be within budget, which narrows down the number of suburbs to search in. 

In Sydney, there are 12 potential suburbs where two mates can buy a unit for a median of $500,000 or less. The closest suburbs to the CBD are Auburn, Rosehill and Harris Park, all within 20 kilometres. 

Local Rosehill agent Arianne Fontanilla of Agius Property Group says people entering the market are mostly individuals using the Home Guarantee Scheme, particularly people between 20 and 30.

“Especially now that they’re allowing people who haven’t bought in the last 10 years as well,” Fontanilla says. “That helped a lot with people who already have a property to sell. And also to purchase as well – to have that confidence to purchase. ”

SOLD - $450,000

410/3 Weston Street, Rosehill NSW 2142

1

1

1

View property

Melbourne has double Sydney’s number of suburbs where mates buying together can use the FHBG scheme. More than half are within 20 kilometres of the CBD.

For example, places like Carlton have a median price of $310,000 – meaning that a 5 per cent deposit split between two people is just $7750 each.

George Apostolopoulos of Nelson Alexander Carlton says he hasn’t seen many friends buying together while using the scheme.

He has seen “more inquiries coming from the first-home-buyer market, and there is certainly an appetite to buy at the moment,” he says.

“The majority being single first-time home buyers. We do get families, siblings or parents coming with their children looking to get them into the market.” 

SOLD - $410,000

211/495 Rathdowne Street, Carlton VIC 3053

2

1

1

View property

Canberra only has three suburbs within 10 kilometres from the CBD where buying an apartment for less than $500,000 is possible.

These are Gungahlin, which has a unit price median of $450,000, Bruce $465,000 and Belconnen $494,000.

On the other hand, Brisbane has a whopping 33 suburbs to choose from, with more than half being within 20 kilometres of the CBD. 

Since the start of the new financial year, Andrew Tran of Space Property Paddington has seen more first-time buyers enter the property market and expects the numbers to grow well into the springtime. 

“We found a lot of our transactions recently have been first-home buyers that have gone through [the Home Guarantee Scheme],” he says. “Last month in August, we did about 12 to 13 transactions, but nine or 10 were probably first-home buyers using that scheme.”

Tran has also entered the property market himself, thanks to criteria and eligibility changes. Previously only Australian citizens could use the scheme.  

“Permanent residents are now eligible for that scheme,” he says. “My partner is from Norway, and we’ve been waiting for her to become an Australian citizen so she’s eligible. Since they removed that criteria after the financial year, we jumped into the market straight away, and we ended up buying something that is currently under offer at the moment.”

SOLD - $458,000

9/574 Boundary Street, Spring Hill QLD 4000

2

2

1

View property

In Adelaide, there are 13 suburbs where two friends can pitch in $12,500 each to enter the property market using the FHBG.

The ones closest to the CBD are Bowden, Prospect and Plympton – all within six kilometres.

For those looking on the west coast, there are 33 suburbs in Perth where it’s possible to use the FHBG and find an apartment under $500,000.

The closest to CBD are West Perth, East Perth and South Perth – all within three kilometres.  

“The recent expansion of the eligibility criteria for the scheme to include siblings, friends, permanent residents and people who haven’t owned a property in Australia for more than 10 years allows even more home buyers to take that next step towards home ownership,” says Great Southern Bank chief customer officer Megan Keleher.

“We understand saving for a deposit and buying a home can feel challenging, but by using available government support and setting up strong savings habits, home ownership can be a reality.”