Victoria launches a $ 500 million fund to bring home buyers into the market in exchange for a stake in the property.
- Most recipients of the Victorian Home Buyer Fund must have a 5 percent deposit, with the government chipping up to 25 percent on top of that
- The government will keep this share in the home until the property is sold or the owner buys his share
- However, the opposition has accused the government of giving with one hand and taking away with the other due to increases in stamp duty and land debt
Treasurer Tim Pallas said the Victorian Homebuyers Fund (VHF) is expected to help about 3,000 residents buy a home.
The fund is an extension of the $ 50 million HomesVic Shared Equity Initiative, which the government said helped more than 330 households enter the market.
According to the plan, future homeowners must have a deposit of 5 percent, where the government can kick up to 25 percent of the value of the house.
They do not have to be the first home buyers, but can not currently own a property.
“They will be able to buy homes with the help of the Victorian government, which will be an equity partner in the purchase,” Pallas said.
Aboriginal and Torres Strait Islander Victorians will only be able to apply for the fund with only a 3.5 percent deposit.
In Melbourne and Geelong, the homes are to cost $ 950,000 or less, while the cap in the rest of the state is $ 600,000.
Recipients of the financing can then either buy out the state’s share in the home or give back the same share of the value VHF when they sell.
“We will put this money back into the fund so that this is very likely to become self-sustaining given the continuing and historical valuation and value of assets over time,” Pallas said.
The treasurer said people should still be able to demonstrate that they could put together a deposit and the banks would assess credit results and capacity to meet mortgage repayments.
Despite the economic impact of the pandemic, house prices in Melbourne and the rest of the state have largely been rising, shutting more people out of the market.
Pallas denied that the scheme would push house prices up further, something some economists say may be due to tax breaks and incentives for homeowners.
“It’s not something that will effectively increase the price,” he said.
“We do not put more money in people’s pockets … we give them the opportunity to participate in a competitive market.”
The Treasury is still heavily affected by the impact of the pandemic, with the latest budget estimating that debt will reach $ 156 billion by 2025.
Pallas defended the extra $ 500 million in expenses, saying the proceeds would be returned to the state.
“People need help all the way through the pandemic, and as the economy grows,” he said.
“And more importantly, we can not use the pandemic as an excuse to be a one-trick pony.”
As part of revenue-generating measures in its budget, the government increased premium land tax and stamp duty and introduced a new wind capital gains tax.
Shadow Treasurer David Davis accused the government of contributing to the housing crisis.
“These programs are part of their approach to giving with one hand and taking away with the other,” he said in a statement.
“The massive taxes on new housing have been screwed up to pay for Labor’s poor management of infrastructure projects and their cost outbreaks.”
Meanwhile, the Real Estate Institute of Victoria welcomed “any government support that helps more Victorians enter and remain in the real estate market”.
The Victorian Homebuyer Fund seems to be a sensible policy that will be particularly useful to [first-time] players in the real estate market, ”said REIV’s CEO Gil King.