- Participants provide a 5% deposit, government provides up to 25% of the purchase price for equity
- Homeowners can purchase the government's equity in the future
- Property Council welcomes the news, but says it doesn't alleviate affordability concerns
The Victorian government has launched a brand new housing scheme, expected to help at least 3,000 eligible Victorians buy their own homes.
The Victorian Homebuyers Fund (VHF), worth $500 million, will allow Victorians to enter the property market at a reduced price and alleviate the financial pressures that come with purchasing a house.
The VHF was established after the government’s HomesVic Shared Equity Initiative was successfully piloted in 2018, and saw over 385 households become homeowners.
Eligibility criteria will be broader than HomesVic – they don’t have to be first home buyers, and the household income thresholds are higher.
Participants will need to fork out a 5% deposit with the Government providing up to 25% of the purchase price in exchange for equity in the property. For Aboriginal and Torres Strait Islanders, homebuyers can buy with a deposit as low as 3.5%, with a Government contribution of up to 3.5%.
Over time homeowners can buy out the Government’s share at market value. The Government will then reinvest the funds to help others get a footing into the property market.
Any property in Metropolitan Melbourne and Geelong can be purchased where the value does not exceed $950,000. A range of regional options is available, with a price cap of $600,000.
“The pandemic has underscored the value of a secure, safe home to call your own – that’s what this program will provide for thousands of Victorians,” said Victorian Treasurer Tim Pallas.
“This will make it easier to secure your own home and we’re proud to play our part in helping Victorians realise this dream – because there’s no place like home and we want every Victorian to know that feeling.”
Tim Pallas, Victorian Treasurer
Fund doesn’t alleviate affordability concerns, Property Council says
While The Property Council of Australia (PCA) has welcomed the announcement broadly, Victorian executive director Danni Hunter said urgent action from the state government is needed to address the issue of worsening housing affordability.
“The Fund is a welcome announcement, but it will do little to address the significant structural issues behind Victoria’s housing affordability crisis”, Ms Hunter said.
“In fact, the necessity of the Fund proves that home ownership is out of reach for many Victorian families. This has only been exacerbated by the increases in property taxes under this Government.”
Danni Hunter, Property Council Victoria
Ms Hunter explained that a new tax – the Windfall Gains Tax – will be introduced soon, which is the ninth new property tax introduced by the Andrews Labor government.
“This massive new tax will drive new home prices up and stall development in our urban renewal and regional areas, pushing housing further out of reach of hopeful homebuyers looking to build a better life for themselves and their families,” she added.
By abandoning the tax and increasing the supply of new housing, especially in Melbourne’s middle suburbs, Ms Hunter argued this would assist more Victorians into their own properties.
“It is a lack of supply of new homes, coupled with exorbitant property taxes, that is driving home ownership beyond the reach of many prospective first-home buyers, and any measure that does not seek to address this fails to properly address housing affordability.”