$800m to sweeten Labor’s deal for first-home buyers

Australians hoping to buy their first property in one of the most expensive housing markets in the world will get $800 million more in assistance as the Albanese government relaxes the criteria for qualifying for its much-delayed help-to-buy scheme.

Under the scheme, the federal government provides first home buyers a helping hand by contributing 30 per cent of the purchase price for an existing property, or 40 per cent for a new property.

The first-home buyer only has to contribute a 2 per cent deposit, which dramatically reduces the amount of money needed up front, and in time the homeowner can either buy out the government’s stake or repay it when they sell.

Under the planned expansion of the scheme, both the income eligibility cap and the property price cap will be increased and the overall Commonwealth investment required will rise by $800 million to $6.3 billion.

A single person will now be able to earn up to $100,000, up from $90,000 and still qualify while a couple can earn up to $160,000, up from $120,000 and still apply for the scheme.

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The rise in the property price cap will mean that a home in Sydney worth up to $1.3 million, up from $950,000, could be purchased with the government, while in Melbourne homes worth up to $950,000, up from $850,000, would be eligible.

The changes would mean that most first-home buyers are now eligible to use the program and about 5.2 million homes across the country – about 65 per cent of properties – could be purchased under the scheme.

Federal Housing Minister Clare O’Neil said that even before the changes, she had been confident the program would be popular but the decision to expand eligibility was designed to help as many young people as possible.