- Regional prices have increased dramatically since the pandemic began
- The scheme has a range of eligibility criteria, including the buyer(s) must have lived in the area or adjacent to it for at least a year
- Has been welcomed by lenders and property industry bodies
From this Saturday 1 October, 10,000 new places will be available for Australians in regional areas to enter the housing market sooner, under the Australian Government’s Home Guarantee Scheme (HGS).
The Regional First Home Buyer Guarantee (RFHBG) allows eligible first home buyers to enter the market with a deposit of as little as 5%. Essentially the government takes the risk between the deposit and 20%, which is generally needed to avoid Lenders Mortgage Insurance (LMI).
While much of the recent housing boom has been focused on the Sydney, Melbourne and Queensland markets, regional areas saw significant booms too, primarily thanks to greater flexibility with working arrangements and relative affordability compared to the larger cities.
To be eligible home buyers (or at least one borrower if applying as a couple or similar arrangement) must have lived in the regional area, or adjacent to it, for the preceding 12-month period to data when their home loan agreement is executed.
A partial exemption is applicable for Defence Force members. There are other eligibility and lenders criteria along with property price caps.
The introduction of this scheme means the entire HGS program now has 50,000 places. There are currently 32 participating lenders, which have been authorised by the National Housing Finance and Investment Corporation (NHFIC).
“NHFIC welcomes this targeted support for first home buyers living in regional Australia. Making it easier for more Australians to access housing is our fundamental purpose, and programs like this are even more important as aspiring homeowners cope with increasing cost of living pressures,” NHFIC CEO Nathan Dal Bon said.
Universal support
Unsurprisingly, lenders and industry bodies have responded well to the scheme.
Andy Kerr, NAB Executive Home Ownership, said the bank had seen first-hand how the schemes have helped thousands of Australians purchase homes earlier than possible.
“We expect strong demand for places in the Regional First Home Buyer Guarantee,” Mr Kerr said.
“Regional Australian locations definitely became popular at the start of the pandemic with people moving for a ‘green change’ and this scheme will be pivotal in making the move a permanent one for many.
“Our latest data shows us that clearly regional areas remain appealing for first home buyers. Locations like Sunbury in Victoria, Dapto in New South Wales or Bunbury in Western Australia continue to be hotspots for first home buyers.
“We know that affordability has been a concern for many first home buyers. This scheme will be critical to providing more opportunities for buyers to enter the market in regional townships.”
According to NAB’s data, their lending arm has helped more than 15,000 first home buyers through the scheme, with 4,000 of these in regional locations.
The Property Council of Australia (PCA) has welcomed the move, with Chief Executive Ken Morrison said the targeted support will make it easier for more Australians to access housing.
“Regional Australia has seen steep increases in prices making it difficult for locals to save for a deposit,” Mr Morrison said.
“Bridging the deposit gap is a significant problem for first-time home buyers, and the Regional First Home Buyer Guarantee scheme is a well-designed scheme that will assist eligible home buyers enter the market.
“The expansion of the Home Guarantee Scheme to support regional buyers will make it easier for more Australians to secure their dream of home ownership and is a welcomed initiative.”
