New Government… New Developments in Housing in the Hunter

We heard all the pre-election promises when it came to housing – it seemed like every day there was a different announcement aimed at first-time homeowners, retirees or investors. But now the dust has settled, and we have a new Government in place – what will it mean for our housing market?

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The Labor Government's Help To Buy scheme aims to provide an equity contribution of up to 40 per cent for eligible low to middle-income homebuyers, with only a two per cent deposit saving required. But low-income borrowers may still struggle to qualify for finance under the housing affordability scheme, according to one of the nation's most awarded mortgage brokers ‒ 2021 Australian Mortgage Awards Independent Broker of the Year and Zippy Financial Director and Principal Broker Louisa Sanghera.

LOUISA SANGHERA

"Existing schemes that only require a two per cent deposit have proven mostly unsuccessful for prospective lower-income homeowners. While the Help To Buy scheme is commendable, borrowers attempting to tap into existing policies that reportedly only require a two per cent deposit, such as the Family Home Guarantee for single parents, have still not been able to secure finance in our experience because of their lower incomes," Ms Sanghera said.

"In my experience, saving a two per cent deposit won't be enough for most low-to-middle-income borrowers to secure finance, especially when their mortgage might still be $650,000 after the government's equity stake, depending on their location."

Ms Sanghera said borrowers wanting to apply for the Help To Buy program should try to save more funds to put towards their deposits as well as reduce credit card limits and debts to improve their chances of qualifying for a mortgage.

According to Nicola McDougall, chair of the not-for-profit Property Investment Professionals of Australia (PIPA), the incoming Labor Government must now prioritise the current rental property crisis.

"The supply of rental properties is at record lows around the nation, with the situation set to worsen due to softer market conditions and rising interest rates," Ms McDougall said.

"Investors have been mostly missing from the property market since well before the last Federal Election, predominantly due to nationwide investment lending restrictions and the political posturing on negative gearing during the last election campaign."

NICOLA MCDOUGALL

"With markets cooling and interest rates rising, it is likely that investors will retreat from the market once more, which will further exacerbate the financial pain that tenants are experiencing."

Ms McDougall said longer-term investors might be concerned about what lies ahead for them, given the incoming government's historically negative view of investors.

"Rather than viewing investors as 'greedy' or an endless source of funds for government coffers, perhaps it's time to recognise that they also provide rental housing for millions of Australians?" she said.

"Indeed, it an uncomfortable truth for some that the present rental crisis is predominantly a result of investor inactivity over recent years, which is hardly a sign of 'greed' when markets have been booming like never before."

For more information about Zippy, visit www.zippyfinance.com.au

For more information about PIPA, visit www.pipa.asn.au