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Labor Party announces scheme to help home buyers
Under its election promise, the Labor Party had announced its policy plan to buy 40 per cent stake in private homes to tackle the housing crisis in Australia.
Domenic Nesci, co-founder at Wealthi described it as “a creative and good policy” that will help people get their own piece of real estate.
Nesci added, “I think it's (policy announcement) great for the opportunity to enter the market. I also think it's good because it stimulates the property market, especially coming into a higher interest rate environment.”
Nesci said he likes the policy “because it allows people to get in and buy property and at the same time it also protects property values to a certain extent. In some areas, we may actually see pressure on the market and property values. There will probably be increases particularly under that sort of threshold of $950,000 in New South Wales and $850,000 in Melbourne.
Here are some initial facts under the Labor Party’s ‘Help to Buy’ scheme:
· It will be available for up to 10,000 households per year
· A Labor government would pay for up to 40 per cent on a new home and 30 per cent on an existing home
· It will be available for couples earning up to $120,000 and singles earning up to $90,000.
· Home buyers will only be required to have a deposit of 2 per cent (or more) can qualify for a standard home loan with a participating lender
Nesci noted that a similar scheme was successfully implemented in the UK.
“Whilst I was living in London, they had a similar program that at a glance is an affordable way to enter the property market,” he said.
Considering the anticipated interest rate rises, Nesci said the Labor policy announcement can be a big push towards housing affordability.
“There will be a big shift towards (housing and property) affordability as buyers go for more value and long-term growth.”
He added, “We’re starting to see a change in sentiment as the pressure builds up on interest rates rises. The upper part of the (housing) market has started to drop and the middle part of the market is starting to drop. But the lower part of the market, the most affordable part of the market, has been resilient.”
If you want to learn how this policy might impact the property market watch this quick video analysis by Domenic Nesci or reach out to team:
Domenic is a Co-Founder at Wealthi, host of the Wealthi Podcast and writes weekly insights at Wealthi Research. Connect on LinkedIn.