A new report from AHURI has found that there needs to be a stronger emphasis on supply side measures and tax-reforms to encourage more first-time home buyers.
The research, ‘Financing first home ownership: opportunities and challenges’, undertaken for AHURI by researchers from University of Sydney, University of New South Wales, Curtin University and RMIT University, brings together the findings from four supporting research projects to examine the challenges Australians have in financing to buy their first home.
It uncovered that achieving the goal of purchasing a first home increasingly hinges on parental resources, whether provided as a direct financial gift or through inheritance.
“While high house prices are often cited as the biggest challenge faced by first homebuyers, our Inquiry highlights that the problem is significantly more complex,” Professor Stephen Whelan of the University of Sydney said.
“Critically, we found existing policy settings are likely to have exacerbated rather than alleviated the challenge faced by first homebuyers to finance home ownership. Politically seductive measures such as first homeowner grants and tax concessions have failed to arrest declining rates of home ownership over time.
“Policy settings in Australia have focussed almost exclusively on demand-side measures that boost first home buyers’ purchasing power, such as First Home Owners grants and stamp duty concessions,”
“A mix of supply-side and demand-side approaches would help more households who would not otherwise be able to buy a home.”
The report noted that current policy settings tend to disadvantage aspiring first home buyers and benefit existing homeowners.Â
“Reforms such as abolishing stamp duty for first home buyers, such as those currently underway in the Australian Capital Territory (ACT) are heading in the right direction,” Professor Whelan said.
The report also said addressing key challenges around saving for a deposit and maintaining repayments were important in getting first home buyers into the property ladder.Â
“Mortgage guarantee schemes can help first homebuyers access the housing market without requiring an unattainable deposit; while shared equity schemes can help first home buyers gain access to the market with a lower downpayment as well as make ongoing repayments more affordable,” Professor Whelan said.
Professor Whelan also said there needs to be a “system where people can have a secure home for a longer term without needing to own the title”.
“Government housing policy ambitions need to expand to include longer tenure alternatives such as rent to buy, shared equity and affordable rental, along with social rental. These types of tenure can offer security and life-long wellbeing outside of home ownership.”