THE NSW Government will contribute up to 40% in a shared equity scheme to help eligible first home buyers enter the property market, as part of a broader $2.8 billion housing package in the state budget.
Premier Dominic Perrottet announced the $780.4 million trial starting from January 2023.
Under the scheme, the government would contribute an equity share up to 40% for a new property or up to 30% for an existing property purchased by eligible buyers.
“One of the government’s priorities is to make home ownership a reality for more people across our State and allow people to live closer to where they want to work, live and raise a family.
“This budget continues our focus on significant and important reform to create a brighter future for NSW families,” the premier said.
Up to 3,000 spots will be available each year for two financial years and only key workers who are nurses, teachers or police – as well as older singles over 50 and single parents with a child or children under 18 years old can apply.
Participants must have a maximum gross income of $90,000 for singles and $120,000 for couples and they must have a minimum deposit of 2% of the purchase price.
The maximum value of the property is capped at $950,000 in Sydney and regional centres including the Central Coast, Illawarra, Lake Macquarie, Newcastle and the North Coast of NSW, and $600,000 in other parts of NSW.
Treasurer Matt Kean said many older singles struggled to find secure housing, with the number of women aged over 55 among the fastest growing cohort of homeless people in the nation.
“Housing security is the bedrock of financial security,” Kean said. “A safe and secure home is fundamental to allow people to earn an income, care for their loved ones and pursue their own interests and aspirations.”
Minister for Homes Anthony Roberts said this scheme would not only help participants overcome the deposit barrier to home ownership, but reduce the size of their mortgage and its repayments.
“This scheme forms part of a broader housing package of $2.8 billion,” Roberts said. “It marks another step in the government’s plan to ensure that every person in NSW has a place to call home.”
UDIA NSW CEO Steve Mann said saving for a deposit can be one of the obstacles to home purchasing.
“It’s good to see the NSW Government introducing policies so that more people can buy a home.
“Whilst this policy is helpful, the housing affordability crisis will only be resolved if we build more homes across the state. I hope that we also see measures to improve the supply of new homes in the budget,” he added.
The Property Council also welcomed the scheme, NSW executive director Luke Achterstraat said it is an indicator of the depth of challenges in the housing market.
“There is no doubt we are experiencing a housing supply crisis in NSW which is putting a strain on affordability, both in terms of ownership and rentals.
“The shared equity trial is using a targeted model of 6,000 places over two years, therefore is unlikely to substantially affect prices.”
However, Achterstraat said this kind of government intervention was a reminder that urgent action was required to address the housing market.
“Whilst these top-down initiatives can assist a few, policies that promote housing supply are the only way to address housing affordability for the many,” he said. “In NSW we are still some 100,000 homes of where we need to be, and that deficit is increasing.
“We need to see significant reform to the planning system including an emphasis on efficient DA approvals, reduced red-tape and timely re-zonings. In NSW, it still takes around 200 days for a block of apartments to be approved, compared to 100 days in Queensland and even Victoria.”
The shared equity scheme has been adopted by the federal government, open to 10,000 eligible applicants, to individuals with a gross annual income of up to $90,000 or $120,000 for couples.
The initiative already exists in other states including South Australia and Victoria.
The Victorian scheme has assisted 1,100 people to buy a home since its launch last October. But the Victorian Homebuyer Fund is capped at a lower rate compared to the NSW and federal governments schemes, providing up to only 25% of the purchase price.