A month into the Australian Government's 5% Deposit Scheme, some homebuyers feel left behind. Peter Njoroge, a 46-year-old father of three, is one of them. He earns around $130,000 a year and his wife earns $40,000, making their combined pre-tax income $170,000. They live comfortably but struggle to save for a house deposit due to high living costs and rent. The federal government promised to help high-earning Australians like Mr. Njoroge become homeowners through programs like its expanded 5% deposit scheme for first homebuyers. However, Mr. Njoroge, who is employed as a casual worker, has been unable to secure bank financing to use the scheme. He feels demoralized and left behind as others get a head start. He hopes the Help To Buy scheme, where the Commonwealth purchases up to 30% of a home or 40% of a new build, will offer better bank financing. The Help To Buy scheme has a limit of 10,000 places and is set to be launched before the end of the year. As the 5% deposit scheme gains popularity, demand for loans is soaring. Real estate agents report longer wait times for pre-approval, and mortgage brokers note a 39% surge in first homebuyer loan applications in October. Home prices are rising faster, attributed to first homebuyer incentives, supply shortages, and previous interest rate cuts. However, growing inflation has dampened hopes of further rate cuts, and the RBA has kept rates on hold. Angus Moore, a senior economist, predicts rising home prices and consumer sentiment. Treasury modeling suggests a 0.5% price increase over six years, while other estimates forecast higher increases. The real winners of price increases are existing property owners, according to housing researcher Chris Martin. Leith Golding, a 58-year-old father of two, shares a similar sentiment. He used to own a home but is now renting after a divorce. Despite his eligibility for the 5% scheme, he finds it challenging to buy an appropriately sized property in his area. He believes that homebuyer schemes benefit one cohort at the expense of others and lead to short-term thinking, pushing housing prices up. He hopes for a more sustainable approach to homeownership, including longer leases and better conditions for renters, to reduce anxiety in the market.
