Buying a home
The Victorian Government’s re-examination of the best way to make buying a home feasible is by offering a 25% contribution to the purchase in exchange for a share in the property.
Treasurer Tim Pallas outlined that the Victorian Homebuyers Fund (VHF) is expected to help about 3,000 residents buy a home. Effectively the government would be an equity partner and the key elements for would-be purchasers are:
- most purchasers would need to have a 5 per cent deposit – the government chipping in up to 25 per cent on top of that;
- purchasers need to be able to demonstrate they have accumulated the 5 per cent deposit and banking requirements – credit scores and capacity to meet mortgage repayment still apply;
- the government will keep the 25 per cent stake in the home until the property is sold or the owner buys out the government share;
- people do not need to be first home buyers, but cannot currently own a property;
- Aboriginal and Torres Strait Islander Victorians will be able to apply for the fund with only a 3.5 per cent deposit.
- in Melbourne and Geelong, the homes need to cost $950,000 or less, with the cap in the rest of the state at $600,000;
- recipients of the funding can then either buy out the state’s share in the home or give the same proportion of the value back to the VHF when they sell and
- the money that is paid back goes back into the fund for other recipients.
Effects of homeownership
The social benefits associated with buying a home include a good place to raise children, a safe place to live, more space for family, and control over one’s living space. The non-financial benefits associated with homeownership, which have been linked to better physical and psychological health, are evident.
As real estate agents, we list the benefits of a property and often these are external qualities. The intrinsic must-haves of buying a home are often community living, access to the outdoors and natural resources, healthcare, shopping, educational opportunities, entertainment, arts and culture, transportation, and a family-oriented environment. Whilst renting has been shown to be an equally viable option for many with benefits that have been well-examined homeownership has some advantages that most people want – permanency and equity,
Buying a home contributes to financial security and stability by offering homeowners protection from rising housing costs, increased forced savings and purchasing power. Homeowners also have the ability to borrow against the equity of the home, and the opportunity to refinance at lower interest rates.
The current housing environment – even through Covid – is characterised by rising house prices, strict lending standards and slow wage growth and has presented sobering challenges to would-be homeowners. Although interest rates have declined, buying a home is still out of reach for many people because saving the 20% deposit required is prohibitive. Perhaps an injection of funds directly in the arm of would-be owners is a shot many people will gratefully accept.