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Sharing a living space with friends often marks a significant milestone in early adulthood. Some friendships evolve into shared homeownership, and as of July 1 this year, this transition has become considerably more accessible.
Through the First Home Guarantee (FHG), a component of the Home Guarantee Scheme, two prospective buyers can acquire a property with just a 5% deposit, all without the burden of paying lender’s mortgage insurance. Ordinarily, purchasing a home necessitates a minimum 20% deposit, a substantial sum that may take years to accumulate. However, the FHG offers a swifter route to homeownership, allowing individuals to enter the market with greater ease.
Previously, the scheme exclusively accommodated first-time buyers purchasing with a spouse. However, the recent expansion of eligibility criteria now extends to any two individuals, whether they are siblings, parents (provided they haven’t owned property in the past decade), or friends.
According to the most recent Domain House Price Report, over 100 suburbs in Australia’s capital cities boast median property prices below $500,000. With a 5% deposit requirement on a $500,000 property amounting to $25,000, when two friends (or siblings) join forces, each person’s contribution comes down to a manageable $12,500.
When seeking properties in this price range, units are often the most viable option, narrowing down the list of suitable suburbs. For instance, in Canberra, there are three suburbs located within 10 kilometers of the CBD where purchasing an apartment for less than $500,000 is feasible: Gungahlin (with a median unit price of $450,000), Bruce ($465,000), and Belconnen ($494,000).
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In Sydney, there are a dozen potential suburbs where two friends can jointly purchase a unit for a median price of $500,000 or less. The closest suburbs to the CBD include Auburn, Rosehill, and Harris Park, all within a 20-kilometer radius.
Melbourne outshines Sydney in this regard, boasting twice the number of suburbs where friends can leverage the FHBG scheme for joint purchases. Over half of these are situated within 20 kilometers of the CBD. For example, Carlton boasts a median price of $310,000, translating to a mere $7,750 contribution per person with a 5% deposit.
Megan Keleher, Chief Customer Officer of Great Southern Bank, emphasizes the recent expansion of eligibility criteria as a game-changer, making homeownership more attainable for a wider range of buyers. She notes that while saving for a deposit and buying a home can appear daunting, leveraging available government support and cultivating strong savings habits can turn homeownership into a reality.
SOURCE: DOMAIN
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