Single parents in most major cities in Australia will not be able to afford a home or unit under the federal government’s new 2% deposit system.
Inflated house prices and ceilings set below most median house and unit values mean that the majority of single income parents will not be able to access the Single Parent Family Housing Guarantee Scheme (SPFHG).
Home loan experts have called the scheme unrealistic, while the federal opposition says it will only help a fraction of single-parent families.
The latest real estate figures from CoreLogic show that the median house price in each major capital is more than $ 100,000 above the house price cap under the program, while single-parent buyers in Sydney and Hobart are reportedly not even allowable one unit at the median value.
In Sydney, the cap is $ 700,000 for existing homes, but median home prices in April in the greater metropolitan area were $ 1.47 million and median unit prices were $ 771,859.
RateCity’s research director Sally Tindall said the proposed program was not the ‘white knight’ for single parents to access stable housing.
“This program has good intentions, but it does little to address the overarching issue of housing affordability in real estate hot spots across the country,” Tindall said.
“It is important to help single parents get more security where they live, but the house price caps attached to this program are not realistic for many single parents who need the extra space. for their children. ”
An expected continued boom in house prices by the end of the year will also mean that the median unit value in Melbourne, Canberra and Perth will exceed the house price cap under the program.
Currently, the median unit price in Melbourne is $ 599,234, which is just below the program’s $ 600,000 cap.
However, by the end of the year, Melbourne’s median unit price is expected to climb to $ 669,210.
The system allows a single parent to get a mortgage with a 2 percent down payment without the need for mortgage insurance from lenders.
The federal government guarantees the remainder of the deposit and will take the hit for that proportion of funds if a mortgage lender defaults.
The SPFHG is an extension of the First Home Loan Deposit Scheme and has 10,000 places available over four years.
Labor Party spokesperson for women, Tanya Plibersek, said the program was “not helping” and will not help enough single parent families in Australia.
“There are a million single parent families in Australia. This will only help 2,500 a year for four years, ”Ms. Plibersek said.
“This policy is tiny. It will only cost the budget $ 300,000 – it’s too small and offers virtually no help.
“Scott Morrison is the classic advertising specialist, great at generating a headline, then he’s quite like” terms and conditions may apply. “
According to RateCity, a 2% deposit on a $ 700,000 mortgage with a variable interest rate of 3.3 would result in a monthly repayment of $ 2,941.
Using the Australian Bureau of Statistics’ average weekly salary for a private sector worker, a loan of this magnitude is equivalent to about half of her monthly salary – just to service the loan.
Planned increases in interest rates over the next three years would also mean an increase in the amount of debt.
Ms Tindall said a single mother with an average female salary would likely be unable to buy a median-priced apartment in most cities without being in severe mortgage stress.
“Buying a property with a very thin deposit can be risky, especially in the face of rising interest rates,” she said.
“The larger the loans, the more they will be affected by rising interest rates.”
The program is available to single parents earning up to $ 125,000 per year and the single parent may be the only person listed on the title of the property and the loan.
It is available for existing or new homes and the person does not have to already own a property.
A new home application has a higher ceiling price than existing homes.
Housing and Homelessness Minister Michael Sukkar said the government understands the importance of owning your own home.
“The Family Home Guarantee recognizes that the challenge of saving a deposit is even more difficult when you have a single income while raising children, especially if you are not eligible for first-time homebuyers programs,” did he declare.
“The Morrison government is committed to breaking down barriers for women leaving abusive relationships and helping them create lifelong financial stability.”
He said the program was running alongside the record $ 1.1 billion investment in the budget for women’s safety, which included a new payment of up to $ 5,000 to help women escape domestic violence and l extension of the Safe Places emergency accommodation program.