One of Queensland’s most successful mortgage brokers has called for the Federal Government to increase the cap for its new Help to Buy scheme as the current $700,000 limit will make it nearly impossible to find a property in South East Queensland.

Colin Mason from the Sunshine Coast based Mason Finance Group applauded the Government’s attempt to help people get into the market, but has questioned how effective the scheme will be.

“It is very small percentage of the market…“I think that $700,000 cap is too low.

“It is very small percentage of the market,” Mr Mason said. “I think that $700,000 cap is too low.

“If you look at it over the next 12 months, once interest rates start coming down which they’re tipping for this year, that’ll obviously produce more demand, and that’s going to push property prices up further again and that $700,000 is going to be very hard to stay below.”

After two-and-a-half years the Federal Labor Government’s Help to Buy equity share scheme finally became law just before Christmas.

Minister for Housing Clare O’Neil said the government understands how cost of living pressures have made it tougher than ever to buy a house.

“We know how difficult it is saving up for your first home. Help to Buy means a smaller deposit to help low and middle-income Australians get on the housing ladder sooner,” Ms O’Neil said.

“Australians expect politicians to stop talking and just get on with delivering solutions and that’s what this legislation is about – putting home ownership back in reach for 40,000 low and middle-income Australians.

But Mason said for the scheme to work, the Queensland cap needs to align with limits in New South Wales and Victoria.

“We need to be more in line with Sydney in Melbourne which I think are sitting around $850,000. We need to be somewhere between that $800,000 to $850,000 range, at $800,000 you still have plenty of stock on the market.” 

“I think government needs to get more feedback from the industry experts with people like myself and builders and other people in the industry who are doing this day in and day out, and they’ll be told the $700,000 figure is too low.”

How the scheme works

The Help to Buy scheme will allow people to co-purchase a home with the government.

Housing Australia will act on behalf of the Commonwealth to give home buyers equity contributions of up to 40% for a new home, and 30% for an existing property.

They only need a 2% deposit and the Government’s equity will push it up over 20% which will take Lenders Mortgage Insurance out of the equation.

Buyers will only have to pay a mortgage for their share of the property and won’t need to pay rent on the stake owned by the government. 

People can buy a house, townhouses, or unit under the scheme, but there is a price cap, and mortgages will only be possible with lenders approved by Housing Australia. 

There are 10,000 spots around the country each year for 4 years.

Who is Eligible?

• You must be an Australian citizen and at least 18 years of age
• You must satisfy the financial capacity test, this rules out people who could purchase the property without the scheme’s help
• If you’re buying on your own, you’ll need to have a yearly income of less than $90,000. And if you’re buying with someone else, your combined income must be less than $120,000
• You must not own any other land or property in Australia or overseas
• You must live in the house

Price caps for Help to Buy

The price caps are different across the states, but most industry insiders fear the government has set them too low, reducing the effectiveness of the scheme.
New South Wales — capital city and regional centre = $950,000
Victoria — capital city and regional centre = $850,000
Queensland — capital city and regional centre = $700,000
Western Australia — capital city = $600,000
South Australia — capital city = $600,000
Tasmania — capital city = $600,000

Author: Richard O'Leary

Experienced writer, commentator and political advisor, Richard held a raft of journalism and editorial roles before taking executive communication roles for multiple Premiers, Chief Ministers and even NBN Co. He grew up in his father’s construction business and joins The Good Builder as its founding Editor.