A month into the Australian Government's 5% Deposit Scheme, some homebuyers feel left behind. Peter Njoroge, a 46-year-old father of three, is one of them. He earns around $130,000 annually and his wife earns $40,000, making their combined pre-tax income $170,000. They live comfortably but struggle to save for a house deposit due to high living costs and rent. The government promised to help high-earning Australians like Mr. Njoroge achieve homeownership through programs like the expanded 5% deposit scheme for first homebuyers. However, Mr. Njoroge and his wife, both casual workers, have been unable to secure bank financing for the scheme. They are essential workers who need houses, but their employment status makes it challenging to get loans. Mr. Njoroge is hopeful that the federal government's Help To Buy scheme will provide better opportunities for bank financing. The Help To Buy scheme, which allows the Commonwealth to purchase up to 30% of a home or 40% of a new build, has a limit of 10,000 places and is set to launch before the end of the year. As the 5% deposit scheme gains popularity, demand for loans is surging. Real estate agents report longer approval times, and mortgage brokers note a 39% increase in first homebuyer loan applications in October. Home prices are rising faster, attributed to first homebuyer incentives, supply shortages, and previous interest rate cuts. However, growing inflation has dampened hopes of further rate cuts, and the RBA has kept rates on hold. Experts predict that the increased demand from first homebuyers will push prices up by 0.5% over six years, with some estimates higher. The real winners of continuing price increases are existing property owners, according to housing researcher Chris Martin. Leith Golding, a 58-year-old father of two, shares a similar sentiment. He used to own a home but is now renting after a divorce. Despite his high salary and eligibility for the 5% scheme, he finds it challenging to buy an appropriately sized property in his area. Mr. Golding believes that homebuyer schemes often benefit one group at the expense of others and lead to short-term thinking, exacerbating the housing crisis. He advocates for a broader housing conversation that includes longer leases and better conditions for renters to make the market more sustainable.
