Budget Housing Reforms Open Door for First Home Buyers

The Five per Cent Deposit Scheme now covers a wider range of buyers, allowing eligible applicants to purchase a home with just a 5 per cent deposit while the government guarantees the remainder. This scheme can also help buyers avoid LMI entirely.

Another alternative is the Bank of Mum and Dad acting as guarantor for the home loan, usually by posting security in the form of an asset such as their home. Access to the Bank of Mum and Dad is not available to everybody. It can be dangerous for all parties in a financial and relationship sense. Both sides need to be really confident that the arrangement is durable and won't threaten their standard of living should things go wrong, so it is not to be taken lightly.

For investors tracking housing policy shifts, the combination of softening prices and expanded government schemes creates a window for first-home buyers that has not existed in several years. The next test will be whether auction clearance rates hold as spring selling season approaches.