Both the Labor and Coalition Government have launched their campaigns ahead of the Federal Election on Saturday the 3rd of May and first home buyers are firmly on their agenda. Rightly so, considering first home buyers represent a market that has been forgotten by the Governments over the last few years as the housing affordability has worsened. Our Coaches have a look at the key takeaways from the announcements made by the Labor and Coalition Government:
The Albanese Labor Government
The Albanese Government will guarantee a portion of a fhb’s home loan, so they can buy a established or new (build) home with a 5% deposit and not pay Lenders Mortgage Insurance (LMI), slated to begin in January 2026.
In an unexpected announcement, the Labor Government has announced that the current First Home Buyer Guarantee Scheme will be extended to all first home buyers that have saved a 5% deposit, without it being means tested and have the thresholds for the increased significantly to better reflect the median house prices in the capital cities.
The current median price in Australia is $820,000. Under the revamped scheme, fhb’s will be able to purchase a home in cities such as Perth, Adelaide & Brisbane beyond the current Australian median dwelling price. The expected price limits will be:
| Capital city | House price limit for scheme |
|---|---|
| Sydney | $1,500,000 |
| Melbourne | $950,000 |
| Brisbane | $1,000,000 |
| Perth | $850,000 |
| Adelaide | $900,000 |
| Hobart | $700,000 |
| Canberra | $1,000,000 |
| Darwin | $600,000 |
In another key makeover of the existing scheme, there will be no income limits placed on this scheme. Currently the income threshold is at $200,000 for couples and $125,000 for single applicants. This will definitely assist a larger portion of first home buyers than the current scheme as those faced with deposit saving hurdles due to the increasing median rent price won’t need a larger deposit to avoid LMI.
At FHBA, we welcome this news as this will help at least another 30,000 first home buyers on an annual basis.
The Labor Government will also be introducing a policy aimed at increasing the supply of housing, which is an important issue. They will invest $10 billion to partner with state developers and industry, to build up to 100,000 homes – importantly, these homes can only be sold to first home buyers. This will alleviate some of the competition from investors for brand new homes.
Anthony Albanese – Current Prime Minister
The Dutton Coalition Government
In an interesting & creative new policy announcement, Coalition Leader Peter Dutton has announced a plan to allow first home buyers of new homes to be able to deduct interest payments on up to $650,000 of their mortgage from their income taxes over a maximum period of 5 years. Unlike, the Labor Government policy, it will be means tested at $175,000 for single applicants and $250,000 for couples at the time of application.
Labelled the ‘First home deduction scheme’ the policy is aimed at also increasing supply of housing & construction of new homes considering it applies to new homes only. For a family on a average income, it would result in savings of up to $11,000 per year.
The major limitations to this scheme are as follows:
- Doesn’t help the majority of first home buyers, as more purchase established homes
- May lead to an increase in the price of new builds
- Doesn’t assist first home buyers with the major hurdle of saving for a deposit
- Only provides assistance to first home buyers after they have purchased their first home
- Policy is means tested and provides a cap on the mortgage tax deductibility
Which policy enhances first home buyer prospects?
At FHBA we firmly believe the Labor Government’s policy is far better in that it expands the original First Home Buyer Guarantee Scheme. The reasons for this include:
- Assists first home buyers with the major hurdle of saving of their home by allowing all first home buyers to purchase with a 5% deposit
- The Labor policy is not restricted by the level of income
- First home buyers can choose to buy an established or newly built home
- No restrictions on the period of time the assistance is provided for
If you are unsure of what your eligible for as a first home buyer, why not a book a complimentary call with a FHBA Coach at a time that suits you by clicking here
Written By,
First Home Buyers Australia
