Almost a third of Victorians who could be eligible for the state’s shared equity scheme for homebuyers would miss out if it is replaced by federal Labor’s proposed Help to Buy initiative, according to independent analysis.
A report by the Parliamentary Budget Office (PBO), to be released on Tuesday, has found 668,800 Victorians – or about 29% of those who could currently be eligible for the state’s Homebuyer Fund – would no longer qualify under the federal scheme.
The report, requested by Legalise Cannabis MP Rachel Payne, said this was due to Help to Buy having lower income and property price caps than the state program, which is considered among the most generous shared equity schemes in the country.
Under the federal scheme, which was a key election promise of Anthony Albanese, the commonwealth would contribute 40% of the purchase price of a new home, or 30% for an existing home, with the buyer required to have a minimum deposit of just 2%.
But singles with no dependents will only qualify if their yearly income is $90,000 or less. This is about $45,000 below the Victorian scheme’s limit of $135,155.
Meanwhile, the limit for couples with a combined income is set at $120,000, almost $100,000 less than the state cap of $216,245.
The maximum purchase price for homes in Melbourne and Geelong is also capped at $100,000 lower under the federal scheme, at $850,000.
According to the PBO, about 10,000 Victorians properties, or 7.8% of those eligible under the Homebuyer Fund, would not be eligible under Help to Buy as a result.
Payne said in the south-eastern metropolitan region she represents in the upper house one in 10 homes won’t be eligible.
“The federal scheme doesn’t even come close to the state’s – particularly for many couples who live in my area, who are wanting to buy a home and start a family,” she said.
The report also does not take into account that Help to Buy is yet to pass the federal parliament, having languished in the Senate for months after the Greens and the Coalition teamed up to delay debate on the bill until this week.
Victoria, and other states, are expected to wind down their shared equity schemes if and when the federal proposal passes parliament.
Under the Victorian scheme, the government contributes up to 25% of the purchase price of a home, provided the buyer has a deposit of at least 5%, which reduces their mortgage and removes the need for lender’s mortgage insurance.
According to the state government, it has helped about 11,500 households buy their own home.
The PBO analysis said 2% of all property sales in the state in the 2022-23 year were made under the fund.
But in the May budget, the government revealed it would stop taking applications for the program from June 2025, when it would “transition to the national scheme”.
It allocated a final investment of $700m in the Homebuyer Fund for 4,600 places.
Payne said the move “completely contradicted” the Victorian government’s recent string of housing announcements, which the premier, Jacinta Allan, has said were focused on helping millennials achieve home ownership.
“It’s quite odd that there is a major disparity around the government saying that they want to see young people get into the market, announcing all these incentives around planning to help with that,” she said.
“Yet at the same time, the financial support that the government can offer seems to be falling to the wayside and is being replaced by a federal system that isn’t really fit for purpose for people buying in Victoria.”
The PBO noted its analysis had limitations, including that it does not account for differences in how the state and federal schemes define eligible locations, and it was sensitive to uncertainties in the property market, including price fluctuations.
It also cannot predict whether individuals might change their behaviour to meet the eligibility criteria for the federal scheme.
Help to Buy is expected to have just 40,000 places available nationwide across four years.
A Victorian government spokesperson said as the Homebuyer Fund was wrapping up, its focused would turn to “seiz[ing] every opportunity to build more homes” in the state.
“Millennials deserve the same opportunities as their parents and grandparents – which is why we’re building more homes and creating more opportunities for them to live near transport, jobs and family,” they said.
