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‘Game-changing’ way first-home buyers can buy a property in just 6 months

The average Australian couple takes four years and nine months to save a deposit for a house. This could be slashed to just six months.

First-home buyers could enter the property market up to six years sooner if the government’s Help to Buy scheme passes through parliament.

Under the proposal, the government would help thousands of Aussies cover up to 40 per cent of the cost of a new home, or 30 per cent for an existing home.

Individuals earning less than $90,000 per year and couples earning less than $120,000 per year, would be able to pay a 2 per cent deposit for a home.

Property market and for sale sign
New research has revealed how much time first-home buyers could save under the government’s Help to Buy property scheme. (Source: AAP)

Do you have a story to share? Contact tamika.seeto@yahooinc.com

New research by Domain has revealed the scheme would allow first-home buyers across the country to purchase a house four years and three months earlier, and a unit three years earlier. That’s compared to saving up the full 20 per cent deposit for an entry-priced home.

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The potential time saved is even greater for Sydney, with five years and 10 months slashed off the time to purchase a house and three years and 11 months shaved off the time to buy a unit.

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“Help to Buy is going to be a game-changer for some Australians,” Domain’s chief of research and economics, Nicola Powell, told Yahoo Finance. "It will mean they will be able to purchase sooner because they will have a lower deposit.

“It also means they will be taking on less debt because the government will have an equity stake in their property. It’s going to help the two financial aspects of buying a home - saving the lump sum deposit and the ongoing obligation of mortgage affordability because you are taking on less debt.”

Domain calculated it would take an average couple aged 25 to 34 four years and nine months to save a 20 per cent deposit for an entry-level house. With Help to Buy, that is shortened to just six months.

How much time could be saved?

Here’s a look at the amount of time the Help to Buy scheme could save eligible homebuyers across the capitals:

  • Sydney: 5 years, 10 months (house), 3 years, 11 months (unit)

  • Melbourne: 4 years, 9 months (house), 3 years, 3 months (unit)

  • Brisbane: 4 years, 7 months (house), 3 years, 4 months (unit)

  • Adelaide: 4 years, 6 months (house), 3 years, 2 months (unit)

  • Perth: 3 years, 4 months (house), 2 years, 2 months (unit)

  • Hobart: 4 years, 4 months (house)

  • Darwin: 3 years, 2 months (house), 2 years (unit)

  • Canberra: 5 years, 1 month (house), 3 years, 2 months (unit)

Note: Hobart units have been excluded due to low volumes

Greens set to oppose scheme

The passage of the Help to Buy scheme remains uncertain, with the Greens describing it as a “lottery” and warning it could further drive up housing prices.

The Greens said they would vote against the bill unless Labor was prepared to make changes to negative gearing and capital gains tax, cap rents and build public housing.

With a limit of 10,000 applicants per year and price caps on properties eligible for the scheme, the Greens also argue it will only help about 0.2 per cent of buyers each year.

The scheme would be open to 40,000 buyers over four years. You don’t have to be a first-time buyer for the scheme but you can’t currently own any other land or property in Australia or overseas.

First-home buyers could ‘end up paying’

Powell agreed there was a risk the scheme could push up home prices and said those buying homes after the first wave of the scheme would be the ones that would “end up paying”.

“If you have a demand-side policy - which Help to Buy is - it’s going to bring, and perhaps fast-track, first-home buyers to make a purchase,” Powell told Yahoo Finance. “And [if] it’s not complemented with boosting supply, you can elevate and lift up pricing.”

Powell said there were risks with winding back negative gearing given the majority of rental properties were provided by ‘mum and dad’ investors.

“If we remove negative gearing, that could have a negative impact in terms of taking away rental properties from the market,” she said.

“We already know that the higher cost of debt has become a burden on many investors and they have actually offloaded their properties and we’ve seen it come out in tightening vacancy rates.

“But I think the missing piece of the puzzle is supply. If we are bringing more first-home buyers to market, what we need to see is long-term policy that is forward thinking and providing affordable supply on an ongoing basis, as well as looking at that demand-side too.”

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