30% Shared Equity Homeownership Scheme Explained

The Grattan Institute has offered a scheme to help first-time home buyers and older Australians buy property with a 5% down payment.

The housing affordability crisis is getting worse according to a study by the Grattan Institute think tank.

Data shows that between 1981 and 2016, the homeownership rate among 25-34 year olds fell from over 60% to 45%, and among the poorest 40% of this age group, it fell by more than half, from 57% to 28%. .

The Grattan Institute has proposed an equity sharing program to help improve affordability for first-time home buyers.

Under the proposed scheme, the National Housing Finance and Investment Corporation (NHFIC) would co-purchase up to 30% of the home’s value, taking a proportional share of the profits when the home is sold.

Buyers would borrow the remaining funds from a private lender, provided they have at least a 5% deposit.

Owners could also buy out the government’s stake in 5% increments.

Income limits would be $60,000 for singles and $90,000 for couples.

“A national shared capital scheme would help young Australians enter the housing market faster, especially those without access to the ‘Bank of Mum and Dad’,” the report said.

“Buyers could borrow less for their first home – which would reduce the level of risk they take – especially since interest rates are likely to rise from here.

“Other first-time homebuyers can use the program to get a bigger home that can accommodate a growing family, avoiding having to pay stamp duty twice if they upgrade in the future.”

In October last year, the Victorian government announced its own share capital scheme, offering up to 25% of the purchase price to up to 3,000 applicants.

The time it takes to save for a deposit is skyrocketing

According to the Grattan Institute, homeownership rates are falling because it now takes much longer to save for a deposit.

“In the early 1990s, it took the average Australian around seven years to save a 20% down payment on a typical home,” the report said.

“Now that would take nearly 12 years. Unsurprisingly, a growing share of Australians rely on the ‘Bank of Mum and Dad’ for a deposit.

“Meanwhile, older renters with a deposit won’t be in the workforce long enough to pay for a home when they retire, even at today’s record high interest rates.”


Source: Grattan Institute

Shared equity for retirees?

The Grattan Institute report says that without a change in policy, more retirees will rent in the future.

Previous research from the Grattan Institute estimates that by 2056 only two-thirds of retirees will own their homes, up from almost 80% today.

Mature borrowing has become a hot topic in Australia, as those who fail to break into the market in their 20s or 30s may find it difficult to secure a home loan later in life.

According to the Grattan Institute report, Australian seniors who rent on the private market are far more likely to suffer from financial stress than owners or tenants of public housing.

“Nearly half of all retired renters live in poverty – with incomes below half the median,” the report says.

“Their numbers will only increase as fewer retirees will own their homes in the future. Older women are particularly vulnerable: women over 55 are already the fastest growing group to be homeless. shelter in Australia.”


Source: Grattan Institute


Are you buying a house or looking to refinance? The table below shows home loans with some of the lowest interest rates on the market for homeowners.


Rate Type Gap Redraw Ongoing charges The initial costs LVR Lump sum reimbursement Additional refunds Pre-approval

Variable More details

Smart Booster Home Loan Discounted Variable – 2 years (LVR
  • Fast turnaround times, can meet 30 day settlement
  • For purchase and refinancing, down payment min 20%
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Variable More details

Low Rate Home Loan – Premium (Principal & Interest) (Owner Occupant) (LVR
  • No upfront or ongoing fees
  • 100% cleared account
  • Additional refunds + withdrawal services

Variable More details

Homeowner Accelerates – Celebrate (LVR
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  • Automatic Rate Matching
  • No upfront or ongoing fees

Variable More details

Careful variable real estate loan (capital and interest) (LVR
  • No ongoing fees – None!
  • Unlimited additional refunds
  • Redraw – Access your extra payments if you need them

Variable More details

Owner Occupied Variable, Principal & Interest (Refinance Only)(LVR
  • No application or ongoing fees.
  • 100% free clearing sub-account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Variable More details

Green real estate loan (capital and interest)

  • Quick turnaround, can meet 30 day settlement
  • Save Thousands of Dollars and Make an Eco-Friendly Choice on Your Loan for Homes Under 12 Months

Image by Barbara Horn via Unsplash

The entire market has not been taken into account in the selection of the products above. Instead, a reduced portion of the market was considered. Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au and Performance Drive are part of the Savings Media group. In the interest of full disclosure, Savings Media Group is associated with Firstmac Group. To learn how Savings Media Group handles potential conflicts of interest, as well as how we are paid, please visit the website links at the bottom of this page.

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