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

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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, how'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 Weekly is one of those want-to-be first homeowners, taking advantage of the expanded scheme.

01:22The 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.

03:00As a whole, the property ladder is on the property ladder.