Experts sound warning over expanded Home Guarantee Scheme as first buyers hold out hope

ABC NEWS (Australia)

The federal government promised an expanded first home buyers' 5 per cent deposit scheme would ensure young people "get the keys quicker". But just days after the scheme rolled out this week, buyers, brokers and agents warned they were seeing signs of a hyper-competitive market for entry-levels homes.

Transcript

00:00It's the spring selling season, typically one of the busiest times in real estate.

00:11Hi, how are you? Thanks for coming today.

00:14This is one bedroom, 36 square, so on the smaller side.

00:17But this property is really for first home buyers and they're out in force at the moment.

00:22What's the guidance? 680. Go through and see the view. It's beautiful.

00:28This year, first home buyers are getting a helping hand.

00:32Questions? Yes, that's its price. We're guiding a million.

00:35The government expanded its home guarantee scheme, meaning more new buyers can get in the market with just a 5% deposit.

00:43The existing income caps have been scrapped and property price thresholds increased.

00:49There's people who can now buy who previously couldn't, which is amazing.

00:53But they'll be competing with investors, upsizers, downsizers and each other.

00:59Do you think this is going to drive competition and demand?

01:03Definitely, definitely. I mean, if more people have more money and pre-approval, then there's no doubt.

01:09I absolutely think it will create urgency in the market.

01:11Buyers will be wanting to buy because they'll probably want to get into the market at this point.

01:16James Wigley is one of those want-to-be first homeowners, taking advantage of the expanded scheme.

01:23The 27-year-old professional has been living with his parents to save up.

01:27Essentially, because I'd be looking at entering the market by myself.

01:30I'm looking at apartments, which is pretty much all I can afford in Sydney at the moment, just given my budget.

01:35He's looking all over the city, but still expects it to be a tough search.

01:40His mortgage broker has told him there are a few things to watch out for with the 5% deposit scheme.

01:46People do forget that prices do fluctuate, but they can.

01:49You're borrowing 95%, and if the market turns for a period of time, and then you're a forced seller, you actually could be selling at a loss.

01:58Richard Brown has clients buying across Australia. About a third are looking for their first home.

02:05The deposit isn't always what stops them.

02:08The cost of housing and the taxes up front are the biggest things that I see stopping first home buyers in particular.

02:16The Albanese government has rejected criticism the scheme is inflationary and open to wealthy individuals,

02:23and says it's about young people getting the keys quicker.

02:26It's a pretty significant contribution for people who get into homeownership, who wouldn't get there themselves,

02:31or would take much, much longer to save that deposit.

02:34The government says this expanded scheme shouldn't push up house prices too much, just half a percent over six years.

02:41But others are sceptical.

02:44I just cannot see that it's going to have such a small effect, just from what I see through my brokerage,

02:49and what clients are currently doing.

02:51One thing that's on the back of my mind is, you know, it's not only easier for me, but it's also easier for everyone else.

02:55For new buyers like James, the race is on to get on the property ladder.

03:00those we have to keep learning reliable.

03:01Woo.

03:02Yes, go after what's interesting about them tap the property ladder.

03:04Do you ever see her?

03:05Are you really stuck around the property ladder?

03:06I'm lucky a few.

03:07You're just going to have to keep learning how you are now.

03:09Now I'm keeping safe on today'sj script.

03:10Art, thank you so much for a lot.

03:11All my housekeeping place around this one.

03:12I asked them now.

03:13I met the Archaldo CAND Springs today.

03:14No matter how many people were sicknesses and oliveesus,

03:15the insurance side, aren't anything else.

03:16Yes, many people were Peninsula teen.

03:19I gotta ask them right now.

03:21If they didn't think that I was no longer than I do last resort.

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