The New South Wales government has announced a shared equity trial to help single parents, older singles, nurses, police and teachers to buy their first home.
The $780m shared equity scheme was announced by the state government on Sunday ahead of its state budget on Tuesday, which will include a broader $2.8bn package to address the housing crisis.
The shared equity scheme allow buyers to enter the market with a deposit as low as 2% of the sale price. It will see the government contribute an equity share of 40% for a new home or 30% for an existing dwelling.
The scheme is means tested and eligible households are limited to a maximum gross income of $90,000 for singles and $120,000 for couples.
The median house price in Sydney is 1.4m.
The scheme will include a cap on the value of the property, which differs according to location.
The maximum property value is $950,000 in Sydney and some regional centres like Newcastle, Illawarra and the Central Coast.
The cap will be $600,000 in other parts of the state.
The trial will take place over two years. Similar schemes already exist in the United Kingdom, Western Australia, Tasmania, Victoria and South Australia.
A shared equity scheme was proposed by the prime minister Anthony Albanese in the lead-up to the election, attracting criticism from the federal Liberals, who said Labor “wants the government to own your home”.
That criticism came despite former prime minister, Scott Morrison, appearing to praise the Victorian model when he was treasurer in 2017. As shadow minister for housing in 2008, Morrison advocated a similar program with the private sector to “ensure mortgagees continue to have access to this viable option to reduce their mortgage burden, especially during the global financial crisis”.
When @AlboMP & I announced ‘Help To Buy’ 🏡 in the election campaign the Federal Liberals hysterically attacked it.
— Jason Clare MP (@JasonClareMP) June 18, 2022
Today the NSW Liberals have announced the same thing.
I wonder if the Federal Liberals will now attack them? 🤔 https://t.co/7wiR1FoKfy
The opposition leader, Peter Dutton, was asked on Sunday whether he had similar concerns about the NSW Liberals’ proposal.
“The bigger issue is the supply side,” Dutton told the ABC. “There are lots of ways in which you can provide support. If you are driving up prices and builders, developers pocketing the money you are giving to first homebuyers, then it is a self-defeating arrangement. As many studies have pointed out, the demand is insatiable which drives the prices up, particularly for younger people who want to move closer to the cities, closer to the coast.”
Prior to Sunday’s announcement, housing groups in the state had said such a scheme could help address the state’s housing crisis.
Shelter NSW said in February that it was “very keen to see” what the government would put in place.
“Many schemes across other states – WA’s very targeted scheme ‘Keystart’ in place since the late 1980s. Certainly worth consideration,” it said.
NSW Council of Social Service said in February that shared equity would “work for some” and said it was “great to put it in the mix”.
We need new approaches to address NSW’s housing affordability crisis - to make sure home ownership isn’t just for older generations, the well-off or young people who will inherit. Shared equity will work for some and it’s great to put it in the mix... https://t.co/MymnjqRdzZ
— NCOSS (@_NCOSS_) February 12, 2022
The scheme is expected to start in January.
Greens housing spokesperson, Jenny Leong, said the scheme was nowhere near what was needed to address the state’s housing crisis, due to its strict eligibility criteria and the level of caps in Sydney’s inner suburbs.
“This scheme is so limited in terms of who can access it that it will have no benefit to people who are eligible and work in the inner suburbs of Sydney, with virtually no properties for a family meeting the price cap,” she said.
“So many people who are in desperate need of housing security will be left out and ineligible for this scheme.”
She also criticised the lack of support for those with a disability, and said it appeared to exclude artists, hospitality workers, childcare and community service workers.
Premier Dominic Perrottet said it would form part of a broader reform package announced in this week’s budget.
“It’s part of a suite of measures and we know housing affordability is a real challenge for families across our state,” he said. “Whether you are in the city or the bush, we want to make sure you have that opportunity get into a home to provide the stability and opportunity for you and your family and that’s what this is all about.”
The scheme drew immediate support from the property sector.
The Property Council of Australia said it was a “strong commitment” to help Australians buy homes. But it also said it was critical that supply-side measures were also pursued.
“The emphasis on assisting some of the state’s most vulnerable people through this assistance program is a well-intentioned endeavour,” the council’s NSW executive director, Luke Achterstraat, said.
“For many Australians, their home is their most valuable financial asset so housing security can create financial security.”
In a briefing on shared equity schemes published last month, the Australian Housing and Urban Research Institute said they can provide a “niche solution for a select clientele of lower income householders” if designed well.
“They have to be targeted towards households with incomes that are high enough to pay the low mortgage but not so high that they could afford a commercial housing loan,” the briefing said. “The maximum house prices the schemes can pay for need to be kept low so as not to adversely stimulate demand in the housing market and push up house prices.”
