Labor has reactivated its Help to Buy scheme, which means you can move into a "home" with just a 2 per cent deposit.
It is what's known as a "shared equity scheme" and was part of the 2022 federal government election commitment.
It means you can co-buy a home, with the government offering a helping hand.
The scheme will give people an "equity contribution" of up to 40 per cent of the cost of a new home, or 30 per cent for existing homes.
It can be a house, unit or townhouse.
The buyer won't need to pay rent on the stake owned by the government.
But you will have to pay a component of any capital gain back to the government.
The capital gains will be calculated in reference to the size of the government's equity share in the property.
For example, if the government holds a 30 per cent share in the property, then it would be entitled to 30 per cent of the proceeds of sale, which includes 30 per cent of any capital gains earned.
Seems like an interesting idea, though I get the feeling this is just going to keep inflating property prices right? It's not doing anything to address the increased cost of housing, just helping more people enter the overpriced market.
Traditionally and ideally, Homebuyers go to the bank with 20% deposit. With 4 bedroom homes costing $1 Million these days, that's $200k. People don't have $200k, that's a problem to be sure.
The proposed solution is to help people who have saved $20k to get into the market. I like that the government is trying to help people get into the market.
I would prefer solutions that lead to houses being cheaper. This solution won't do that. In fact, by making it easier to buy a house at present prices, the government is increasing demand - and therefore house prices. What if instead of increasing demand, the government increased supply? I'm no economist, but if the supply of a product raises to meet demand, prices for that product fall.
This will cause houses to be extremely expensive for sure, especially those owned by corporations. Unless the government imposes price limits, then I don't know.
Does the 2pc have to be dark or white meat? Asking for a friend.
Western Australia has been doing this for well over a decade. Like every large purchase you need to review the details of the contract. I have seen people do really well out of it and others not well at all when it comes to selling the property.
This is the equivalent of adding an extra lane to a highway. It will add very temporary relief, then back to the same old same old. This government doesn't have an interest in making housing more affordable.
I see this as a way for the government to earn a quick dollar and de facto get into the housing market.
When the owner buys back the share I doubt it will be calculated at the price the person bought it for. It would be at the market price at the time of the buyback.
I guess it works both ways too? I can see someone buying the minimum 2 percent and if they get something like opal or mascot towers when they sell at a loss the government is the one that loses out. So I can see it as a way to transfer the risk to the government and live in a place without having to pay rent.
I actually might go for this... I might actually be able to live with my partner.
