The Real Estate Institute of Australia (REIA) is calling the federal government to expand the support schemes for first-home buyers ahead of the Budget 2022.

REIA president Hayden Groves said expanding the First Home Loan Deposit Scheme (FHLDS) and the First Home Super Saver Scheme (FHSSS) will be crucial to encourage more participation from the first-home buyer segment, especially amid the rising house prices.

“We have seen a dramatic reduction of loans to first home buyers with a staggering fall of 21.5% over 2021, reinforcing the need for governments to address both housing supply and affordability for first-time buyers,” he said.

The FHLDS allows first-home buyers to break into the market with as little as 5% deposit, with the government guaranteeing the rest of the deposit requirement.

Meanwhile, the FHSSS provides an avenue for first-home buyers to save money for the purchase of their home inside their super fund.

Mr Groves said another move that would help first-home buyers would be making interest rates tax deductible, even for only a prescribed period of the loan.

“It’s one thing to achieve a deposit, and another to service a loan in an environment as interest rates rise — something we have not seen in Australia for over 10 years — so we need to put in place fair and sensible recommendations to assist Australians coming into the marketplace,” he said.

Addressing affordability

Mr Grove said another crucial suggestion for the federal government to address housing affordability this coming Budget is establishing a national plan to address supply issues for both buyers and renters.

“We need a plan to unlock supply for both buyers and renters that looks at everything from land release planning through to incentivising more rental stock coming online,” he said.

Data shows that for family to meet mortgage repayments, they need to allocate 45.8% income — this is the worst manifestation of housing affordability since 2008.

Latest figures from CoreLogic show that national dwelling prices grew by 22.4% in January compared to the same period last year, bringing the median price to $718,146.

In terms of houses, three capital cities — Sydney, Melbourne, and Canberra — now have a median price of more than $1m.

“At the same time, stock levels or property available for sale in some areas are up to 40% reduced from pre-pandemic levels,” Mr Grove said.

Mr Grove also called for the abolishing of stamp duty, which, he believes is one of the biggest contributors to the affordability woes among homebuyers.

“Stamp duty has made selling and buying a home prohibitive which has contributed to a long-term downward trend for listings,” he said.

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