The Australian government's 5% Deposit Scheme has been in effect for a month, but not everyone is feeling the benefits. This story sheds light on the challenges faced by aspiring homeowners, especially those who are employed casually.
The Dream of Homeownership: A Struggle for Many
Meet Peter Njoroge, a 46-year-old father of three, who, despite his comfortable annual income of $130,000 from disability care work, feels left out of the housing market. Together with his wife's earnings of $40,000 from childcare, their household income is a respectable $170,000 pre-tax. However, like many families, saving for a house deposit has been a daunting task due to the high costs of living and rent.
The federal government, in its re-election promise, aimed to assist hardworking Australians like Mr. Njoroge in achieving homeownership through initiatives like the expanded 5% deposit scheme for first-time buyers. While similar programs have existed, the revamped scheme offers unlimited places, no income limits, and higher price caps for eligible properties. It even caters to single parents and those who haven't owned property in a decade.
But here's where it gets controversial... Mr. Njoroge, despite being eligible on paper, has faced rejection after rejection from banks. The reason? Both he and his wife are employed casually, a situation faced by one in five working Australians.
"They always ask, 'Can one of you be permanent?'" Mr. Njoroge said. "It's not a choice; it's just the way it is."
The constant knockbacks have been demoralizing, making him feel like he's falling behind while others get a head start. "We are essential workers," he emphasized. "Like other workers, we need houses, but at the same time, I'm watching house prices rise."
Mr. Njoroge hopes the federal government's Help To Buy scheme, where the Commonwealth purchases a significant portion of a home, will provide his family with a better chance at bank financing. This program, with its 10,000-place limit, is expected to launch before the end of the year, but specific details on its start date remain unclear.
While the expanded 5% deposit scheme has led to surging demand, with banks and mortgage brokers reporting a significant increase in loan applications, the real winners seem to be existing property owners. According to University of New South Wales housing researcher Chris Martin, the continuing price increases primarily benefit those who already own property, increasing their housing wealth and ability to buy more.
Leith Golding, a 58-year-old father of two from Croydon, Melbourne's outer east, shares a similar sentiment. Even with a six-figure salary and eligibility for the 5% scheme, buying an appropriately sized property in his area still feels out of reach. He believes that homebuyer schemes often help one cohort at the expense of others, leading to a never-ending cycle of rising housing prices.
"The race to ownership is unsustainable in the long term," Golding said. "We need to think about housing in a different way, focusing on issues like longer leases and better conditions for renters to ease the pressure and anxiety in the home buying market."
So, what do you think? Is the government's scheme a step in the right direction, or does it merely perpetuate an unsustainable housing market? We'd love to hear your thoughts in the comments below!
