Where you can buy your first home (if the next government helps pay for it)

First-home buyers relying on government help to get into the property market will have greater spending power, with both Labor and the Coalition promising higher price caps for assistance schemes ahead of the election.

Labor on Sunday revealed its Help to Buy program, a shared equity scheme under which the government would contribute up to 40 per cent of the purchase price of a new home and up to 30 per cent of the price for an existing home.

It comes after the Coalition’s pitch to first-home buyers two weeks earlier, when Prime Minister Scott Morrison announced price caps for the existing Home Guarantee Scheme would be increased from July 1, a move backed by Labor.

Under Labor’s policy, up to 10,000 first-home buyers annually, as well as previous homeowners struggling to re-enter the market, could co-purchase a home worth up to $950,000 in Sydney, with lower price caps in other cities and regions.

An individual with a taxable income of up to $90,000 or a couple with an income of $120,000 would be able to purchase with a 2 per cent deposit, but would need to qualify for a standard home loan with a lender to finance the remainder of the purchase price. They could then buy out the government’s stake over time.

Similar, but smaller scale shared equity schemes are already in place across multiple states.

Under the Home Guarantee Scheme, expanded to 50,000 places annually in this year’s federal budget, first-home buyers and regional Australians can purchase with a 5 per cent deposit, and single parents with a 2 per cent deposit, without the need for lenders mortgage insurance. Individuals earning up to $125,000 and couples on up to $200,000 are eligible.

Price caps vary across the two schemes, but were mostly within a $50,000 range. So, what does that mean in terms of where buyers could afford to purchase?

In Sydney, where the median house price sits at about $1.59 million, on Domain data, buyers would need to head to the outer city to find a suburb median at or below the scheme caps – $950,000 with Help to Buy and $900,000 for existing homes under the Home Guarantee Scheme.

Typical house prices in suburbs like Minchinbury in the west, Riverstone and Quakers Hill in the north-west, and Canley Heights in the south-west, would be just within reach for those using the Labor scheme, with all recording a median of $950,000.

Buyers after apartments would have far greater choice, with the city’s median unit price at about $797,000. They could look to inner suburbs like Elizabeth Bay ($950,000), Redfern ($950,000), Surry Hills ($940,000), where they would largely be limited to one-bedroom apartments.

Domain’s chief of research and economics Dr Nicola Powell said the higher price caps under both schemes would give buyers more choice but noted compromises would still need to be made, particularly in Sydney, Melbourne and Canberra, where median house prices sit above $1 million.

“In Sydney in particular [first-home buyers] are pushed further afield or have to compromise on size or go for unit,” Powell said.

In Melbourne, the price caps for both schemes — at $850,000 under the shared equity scheme and $800,000 for the loan guarantee scheme — are closer to the city’s median house price of about $1.09 million, but still well short.

Suburbs like Mount Evelyn ($850,000) and Mooroolbark ($845,000), both more than 30 kilometres north-east of the city centre, have medians in reach of the higher price caps, as do Seaford in the city’s south-east and Hadfield to the north, both with medians of $850,000.

For unit buyers, Box Hill South ($840,000) and Blackburn ($829,500) in the city’s east would be in reach, as would inner-city Fitzroy ($820,000), with buyers able to pick up two-bedroom apartments with parking. Prices in those suburbs come in well above the Greater Melbourne apartment median of almost $579,000.

Brisbane buyers using the Home Guarantee Scheme would be capped at $700,000, while those using Labor’s shared equity scheme would be limited to $650,000. Both caps fall below the city’s median house price of about $831,000, but well above the unit median of $437,000.

The higher price cap would secure a typical house in outer suburbs like Daisy Hill ($700,000) and Chambers Flat ($693,500) in the Logan City Council region south of Brisbane.

Houses in Tingalpa ($696,750) in the city’s east, and Murrumba Downs ($690,000) to the north are also priced below the threshold, as are unit prices in the inner riverside suburb of Teneriffe ($670,000).

In Perth, the shared equity and guarantee schemes are capped at $550,000 and $600,000, respectively. That’s close to the city’s median house price of about $622,000, and the higher cap would pick up typical homes in the outer coastal suburb of Jindalee, and northern suburbs like Greenwood and Warwick, which all had a median of $600,000.

The beachside suburb of Cottesloe ($730,000) was the only suburb where a buyer could not use a government scheme to buy a typical unit. The city’s apartment median sits at about $358,000.

Buyers in Adelaide had the same price caps under both schemes, and face a median of $750,000 for houses and about $377,000 for units. Suburbs like Hectorville ($592,500), Clearview ($580,000) and Paradise ($580,000), all within 10 kilometres of the CBD, have medians below the price cap.

Inner city Unley ($630,000) was the suburb to record a unit median that topped the price cap.

With the property market cooling, particularly in Sydney and Melbourne, more opportunities may open up for first-home buyers in the months to come, Powell said.

She added buyers should not discount a suburb because the median was over budget, noting many suburbs had a broad spectrum of properties.

However, Powell warned buyers they would soon be facing higher interest rates and should be mindful of overextending themselves by taking on too much debt, particularly in a market where prices are softening.