This month the Victorian government announced a new ‘shared equity’ scheme to help home buyers to purchase a house with a deposit as low as 5%.
The scheme will see the state government provide up to 25% of the purchase price of your house through the Victorian Homebuyer Fund in return for an equivalent share in the property.
You then repay the contribution to essentially ‘buy-out’ the fund’s share in your property or if you sell it, you reimburse the fund according to the percentage value of their share and the sale price.
The program is not restricted to first-home buyers and applies to properties in regional Victorian (up to $600k) as well as in Melbourne and Geelong (up to $950k).
When launching the new fund, the Victorian Treasurer Mr Tim Pallas told reporters the COVID-19 pandemic had demonstrated how having a home was vitally important and rejected suggestions the scheme would push house prices up.
Economists opinions were mixed on the expected impact at the cheaper end of the property range and suggested the scheme was probably too limited to significantly impact the market.
Similar shared equity schemes are already active in Western Australia and South Australia.
There are some restrictions on who can apply for the fund, including that the property must be your principal place of residence, your gross annual income be less than $125k (or $200k for joint applications) and you must not be purchasing the property from a relative.