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NSW Premier Dominic Perrottet intends to float a plan that will see first home buyers hand over some of the equity of their property in exchange for help with the deposit.
The scheme would also allow parents of first home buyers to transfer equity in their homes to the government to help their children get a foot on the property ladder.
While further details of the initiative are yet to be released, the NSW Treasurer’s office is reporting that several options have been tabled for first home buyers: that buyers will be able to leverage equity on the purchase of an existing home, that they could leverage equity from the land on which a home buyer builds a home, or by using equity against the home of a guarantor.
Mr Perrottet has said the scheme is intended to get first home buyers into the property market earlier, and the equity held by the state would be repaid in instalments or when the property was sold.
News of the forthcoming proposal has already won some backers, with the NSW Council of Social Service saying that equity arrangements such as this are important to have “in the mix.”
“We need new approaches to address NSW’s housing affordability crisis – to make sure home ownership isn’t just for older generations, the well-off or young people who will inherit. Shared equity will work for some,” it said.
But it stressed the need for more government investment in social housing for those “without savings or secure, well paid work and battling other challenges”.
Minister for Homes Anthony Roberts told the Sydney Morning Herald that this support of industry would help to increase housing supply “which will help unlock new ways of providing social and affordable housing, meaning more keys in doors for our state’s most vulnerable people”.
He added that the policy would help to open doors to property investing for those who don’t have “access to the bank of mum and dad”.
Though Mr Perrottet, who has six children and announced in October 2021 that he and wife Helen are expecting their seventh, has said he believes many parents might take advantage of the guarantor provision to help get their children into a home.
“As a parent, I would happily sacrifice some equity in my home if I knew it would give my kids a foot in the door to our state’s property market,” he said.
The initiative is part of what Mr Perrottet has promised will be a larger plan to address housing affordability. The Premier has long been a proponent of scrapping stamp duty in favour of an annual tax.
But the state’s Treasurer Matt Kean has expressed doubts over whether that system would be viable for the state without federal support.
Mr Kean has, however, voiced his support of the new equity transfer plan.
“Home ownership is a problem that is going to take time to address which is the very reason why we need to start now,” he said.
“We need to make sure that every Australian who works hard to get ahead can buy a house, because buying a house is more than owning a home, it is about buying a stake in the future of our country,” Mr Kean said.
The scheme – although in the early stages of planning – appears not unlike the system introduced in Victoria late last year, which is known as the Victorian Homebuyer Fund – which sees the state government provide up to 25 per cent of the purchase price in exchange for an equivalent share in the property, provided the eligible participant has a 5 per cent deposit.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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