The suburbs you need to target to qualify for the new first-home buyer deposit scheme

First-home buyers wanting to use the federal government’s new first home loan deposit scheme will be forced to buy homes in areas well outside of expensive cities, particularly in Sydney and Melbourne.

The government unveiled the latest details of its scheme over the weekend, confirming that 10,000 applicants would be chosen on a first-in, best-dressed basis.

It also revealed the price caps for every capital city and regional  across the country, which were set according to local property market prices and conditions.

The scheme, which will allow eligible first-home buyers to get a mortgage with only a 5 per cent deposit, will kick off in January next year.

The mortgage thresholds differ depending on the state and regional centre, with first-home buyers in Sydney limited to a loan of $700,000 or less, Melbourne to $600,000 or less, Brisbane $475,000 or less and Perth $400,000 or less.

Domain crunched the data from its latest quarterly House Price Report and found a number of suburbs in the capital cities with median prices under the price caps.

At those prices, Brisbane first-home buyers could snap up a house close to the CBD with Taigum, only 13 kilometres north of the CBD, having a median house price of $467,750. Capalaba, 20 kilometres from the CBD, has a house price median of $475,000, while the bayside suburb of Thorneside, just past the popular village of Manly, has a median of $421,000.

First-home buyers in Melbourne and Sydney would have to go out to suburbs well over 30 kilometres from the city centre to purchase a house under the price caps for the scheme.

Those first-home buyers looking to live closer to the CBD would need to buy an apartment in suburbs like Sydney’s Hornsby and Ryde, which have medians at under $700,000, and Melbourne’s Carlton and Southbank which are under $600,000.

Those looking for a house in Sydney would need to head west to Woodcroft, which has a median of $700,000, or to suburbs like Fairfield West, South Wentworthville, Seven Hills, Jordan Springs, Hinchinbrook, Cabramatta, Spring Farm and Smithfield. 

Meanwhile, Melbourne suburbs including Darley near Bacchus Marsh, Westmeadows, Healesville, Somerville and Dandenong North all have house price medians of $600,000, opening them up to those looking to apply for the deposit scheme. 

The first-home buyer hotspots of Cranbourne North, Clyde, Eynesbury, Wyndham Vale, Melton West and Geelong’s Armstrong Creek all offer house prices under that threshold. 

Brisbane’s western suburbs of Goodna, Kingston and Crestmead along with Bald Hills and Margate in the north all sit under the $475,000 city and regional centres price cap. 

Coastal regional homes in Nambour and Beerwah on the Sunshine Coast, and Nerang and Labrador on the Gold Coast, also had medians which would qualify buyers for the scheme.

In Perth, Wanneroo in the northern suburbs has a median of $400,000 while Singleton in the outer south west sits just below that median. Thornlie in the south east, Ballajura in the east and Balga in the north also sit below $400,000.

First National Hills District residential and projects consultant Taylor Bredin works in the outer Sydney suburbs including Woodcroft and says many first-home buyers are setting budgets based on the tax incentives and available grants.

“A lot of times they set the price they want by the scheme,” Mr Bredin said. 

While the first-home deposit scheme may help some, he didn’t believe it would have much, if any, impact on the housing market given there were only 10,000 grants available. 

“It’s a drop in the bucket,” Mr Bredin said. “We’re meeting in excess of 300 first-home buyers every weekend at open for inspections and that’s just in our area.”

He said many first-home buyers were looking to buy under $650,000 to avoid paying stamp duty, with that being the “hottest” price point. 

Hodge’s Werribee’s Tony Vercher, who works in Melbourne’s outer west, agrees that the scheme will have little impact on the local market.

“From our point of view anything of assistance is good [but] you’d think there’d be more than 10,000 first-home buyers across Australia,” Mr Vercher said.

As prices fell across Melbourne after the peak in 2017, first-home buyers had come back to the market in droves, with homes more affordable, he said.

Interest rate cuts and the easing of lending criteria had also helped more first-home buyers back into the market over the past few months.

The government’s home deposit scheme has been met with mixed reactions, with some industry experts highlighting how tens of thousands of aspiring home owners were likely to miss out.

While it could shave years off the time taken to save for a first property, fewer than one in 10 first-home buyers will be able to access the scheme, despite there being more than 100,000 first-home buyers a year.

Domain research analyst Eliza Owen said while it could be worthwhile for first-home buyers because they could save for a deposit faster, it could see them take longer to pay it off.

“I think something first-home buyers should be aware of, with a 5 per cent deposit, is just how much it can add to your mortgage in interest,” Ms Owens said.

“It can cost more in the long run and take more time to pay off as opposed to a mortgage with a 10 per cent or 20 per cent deposit.”

Rising interest rates could also hurt them, with a higher amount borrowed meaning rises would also add more overall to their loan, she said.

The detail of the scheme is part of a draft now sitting with the federal treasury and is open to public feedback until November 4.