Mid-year Budget report shines light on scheme’s uptake, announces $10 billion First Home Supply Program
More than 21,000 first-home buyers (FHBs) have used the First Home Guarantee to enter the property market since the scheme saw a large-scale expansion in October.
Under the scheme, FHBs can purchase a property with just a 5% deposit without forking out for costly lenders mortgage insurance (LMI).
Following the October scheme expansion, previous income caps and annual quotas were completely removed, while house price thresholds were substantially lifted.
The expansion has proved divisive, with critics warning that it will pour even more fuel on the housing bubble without addressing supply shortages.
But it has proved undeniably popular for FHBs, given the 21,000-plus figure announced by the government in today’s mid-year economic and fiscal outlook (MYEFO).
Since May 2022, the scheme has helped more than 200,000 people into homeownership.
$10 billion earmarked for new homes
The MYEFO also outlined a $10 billion program to build 100,000 new homes for FHBs.
“Through the First Home Supply Program, the Government will partner with states and territories and industry to unlock more housing supply and make it easier for first home buyers to own a home of their own,” it said.
The Government is investing $2 billion in grants and $8 billion in concessional loans to deliver these homes, while state governments intend to provide $2 billion in matched funding to get the ball rolling.
“The Government will work with states and territories and industry to identify land that is vacant or underutilised,” said the MYEFO. “Construction on the first homes will start in 2026–27, with first home buyers to begin moving in from 2027−28.”
Discussing the MYEFO with MPA, AMP chief economist and head of investment strategy Shane Oliver, who is an outspoken critic of the government's demand-side measures such as the First Home Guarantee, said "anything to boost supply is good and this program is welcome".
However, "the proof will be in the pudding though, as Governments have been working to boost supply over the last two years now and we are yet to see a lot of progress", said Oliver.
"Regulation, tradie and material shortages are all in the way and likely to slow this program as well," he warned.
