12 March 2020

Doorstop interview, Tonsley, South Australia

Note

Topics: First Home Loan Deposit Scheme

Sukkar:

  Thanks, Nicole.  It is great to be there in Tonsley to see this development and to meet with Michael, one of the 7,500 people that have accessed the First Home Loan Deposit Scheme.  On 1 January this year, we commenced the Scheme, which allows potential first home buyers to get into the market with a 5 per cent deposit.  One of the issues that we have found in recent years with the affordability of housing is how difficult it is to get that 20 per cent deposit together.  In some cases, taking many years to save the full 20 per cent deposit.  So the First Home Loan Deposit Scheme allows first home buyers within certain income caps and price caps, to purchase their first home with a 5 per cent deposit with a government guarantee that enables them to get into the market many years in advance.  One of the wonderful things about visiting a project like this in Tonsley and meeting with Michael is seeing exactly how this programme is getting people into homes earlier and what difference this makes in their lives and in the lives of communities.  Seeing a project like this that is certainly one that is working closely with State and Federal Government infrastructure planning and ensuring that it’s a project that is going to stand the test of time as far as being a liveable community for people like Michael, is something that you can’t compete with as far as seeing it in the flesh.  So that’s why we’re here today.  Michael has showed us around an example of his first home which I must say is a great example of the sort of home that our first home buyers will be getting into as part of the First Home Loan Deposit Scheme and perhaps, Michael, you might want to say just a few words on how the First Home Loan Deposit Scheme has accelerated your purchase of a new home and what it means for you.  Home-buyer:  Sure.  Obviously saving up 20 per cent takes years. I was probably at least a year or more away from getting to that 20 per cent figure so the scheme coming in in January really helped me a lot, the timing was just perfect for the product that I wanted to purchase here. It’s got me in, I secured a place in the scheme in early January, settlement went through just a couple of weeks ago, and the build will start in the next few weeks so I’m really excited. 

Sukkar:

  Well, there are few more exciting things in your life than buying your first home and as far as the First Home Loan Deposit Scheme goes, here in South Australia, we’ve had over 400 people who have successfully got to the point that Michael has as far as advancing through the First Home Loan Deposit Scheme.  The caps here in South Australia are $400,000 for the capital city and $250,000 for the rest of the state.  It’s been extraordinarily popular as I said.  7,500 in the first couple of months and we have $10,000 places available until 30 June and importantly, another 10,000 places become available on 1 July.  So this is a scheme that is going to keep rolling on, keeping helping people just like Michael to get into the market, hopefully into a great product like this.  Any questions? 

Journalist:

  I know you’ve covered it but how significant is it for young people, especially young couples struggling with the costs of getting together a deposit? 

Sukkar:

  The anecdotal evidence has really supported the entire purpose of the Scheme.  We know that if you’ve got a pretty stable job and you can service a loan, you feel confident in buying a home. But getting that 20 per cent deposit together is just taking years and years so this accelerates that process, it gets your foot on the property ladder much earlier and without mentioning what that does for you financially, just being able to get into your home years in advance just makes a big difference to people and the anecdotal evidence we’re getting through supports that and I suppose the numbers don’t lie.  7,500 already since the scheme started on 1 January, show just how popular this scheme is. 

Journalist:

  Michael, you’ve already spoken about your situation but just highlight for us how significant this is or how much of a difference this made for you guys?  Home-buyer:  Yeah, so for me, getting to 20 per cent would’ve been something along the lines of $80,000 in a deposit.  I was a good twelve to eighteen months away from that.  So being able to get into the market now means less time renting obviously and actually I was able to put some money away to go towards furnishing my new house that would’ve otherwise gone towards the deposit as well. 

Journalist:

  What was the process like in terms of signing up to it?  Home-buyer:  I went and saw the Commonwealth Bank during the first week of January. My place in the Scheme was secured less than two weeks later.  I just had to provide documentation but yeah, a pretty easy and then just the whole home loan process from there and that went through a couple of weeks ago so it didn’t take too long at all. 

Journalist:

  What would be your message for other people I guess in terms of your experience and going forward, given that there are more places in the Scheme that will be available for them?  Home-buyer:  I’d encourage people to get involved. The sooner you can get into the market the less money that you’re wasting on renting so yeah, it’s been great. 

Journalist:

  Are there any risks for young people with such a low deposit?  Home-buyer:  Not really. As long as the lenders still have their criteria and you have the ongoing income, I don’t see any risks. 

Sukkar:

  I might add to that because that’s a really good question. In designing this Scheme, we wanted to make sure that this helped people that would otherwise meet the credit criteria. So in this case, the CBA, got the process going for Michael in a couple of weeks.  They don’t want to take on a loan with somebody that’s not going to be able to service the loan. We haven’t altered any of those credit requirements, they are in place, all we want to do is to accelerate that purchase, which in Michael’s case, has been by up to 18 months.  In some cases, particularly in Sydney and Melbourne, by many years it’s getting those people in who are a safe bet, a good bet but they’re getting in much earlier. 

Journalist:

  So do they still need LMI (Lenders Mortgage Insurance) on top of the five per cent? 

Sukkar:

  No, so an added benefit of the government guarantee provided under the First Home Loan Deposit Scheme is that you aren’t required to pay LMI.  So, depending on the value of the property, it means many many thousands of dollars.  So that’s an additional benefit and one that we know has accelerated the demand from first home buyers. 

Journalist:

  You mentioned that there’s the further 10,000 places from 1 July, further beyond that, what’s the outlook for the scheme? 

Sukkar:

  Well its 10,000 places each financial year so they will become available on the 1st of July each year.  This year is unique in that we started the scheme on 1 January and we decided to ensure that there were 10,000 places for the first half of this year, because we knew that there was going to be significant demand from people who were perhaps holding back a bit.  So this calendar year, in a sense, 20,000 will become available but each year after that, it will be 10,000 and we will always review that.  If you look at the demand so far, we are half way through March and we’ve got 7,500 gone so it’s been pretty popular.  How much of that is the pent up demand that I spoke about is hard to judge but we want to make sure that this scheme is available to as many people as possible particular at those income points and the price points that I spoke about.  This is to help people buy a modest first home rather than buying a castle or a mansion.  We think that where taxpayers and the government are supporting people it’s for people that are really getting into that modest first home.  I suppose when you look around at a development like this, modesty isn’t a word that comes to mind, it’s actually very nice but you sort of get that point about just how good the stock is in the market at these price points. 

Journalist:

  Around Australia, are there any hotspots we’re people have been taking it up the most? 

Sukkar:

  Sydney and Melbourne have been, as you’d expect, probably the areas that have taken the most places but very pleasingly, if you look at the 400 here in South Australia and in most States and Territories, by and large it’s where you’d expect them to be based on the population.  We ensured that the house price caps were different depending on each market that they’re in.  We wanted to really ensure that this didn’t just get gobbled up by Sydney and Melbourne and Brisbane and fortunately that is how it’s turned out we have over 400 in South Australia already and that is really pleasing…inaudible. 

Journalist:

  Nicole, obviously the South Australian building industry hasn’t been going too well particularly for local building companies.  Given this influx and if thousands of people come forward wanting to build their homes, will this have a positive impact for the building industry as well?  Nicole Flint MP:  Yeah it’s a positive for everyone and that’s why I’m just so excited that the Federal Government has been supporting not only first home buyers but developers and builders and encouraging more people to think about getting into their own home and at the moment, I think that it’s really critical.  I don’t know if you want to add anything to that, Minister? I don’t know if you want to touch on the savings that you can do through your Superannuation as well? We’re just encouraging everyone to save and to put their hand up for this fabulous scheme and get into their first homes and it’s great for the South Australian economy. 

Sukkar:

  The building and construction industry is one of the largest employees in the country, no doubt and in the last couple of years we’ve seen nationally, dwelling approvals and construction not at the levels that we’d probably like it to be.  So this scheme is primarily designed to help people like Michael but a great dividend is that you fuel the sorts of demand that you need. With Michael, who has bought a house and land package, essentially to fuel that construction, we know that that is, for each of those dwellings, dozens of jobs, the economic benefit for locally communities is phenomenally strong.  So it was certainly a really important part of the scheme and as I said, with 10,000 places each year, we can underpin a certainly level of construction activity which is really important.  Often in a development like this, first home buyers might only be a segment of the entire project but often that can be building block to get the project underway. 

Journalist:

  Just on another matter as well.  Will you at dumping the cash limit legislation? 

Sukkar:

  Obviously on day like today when we’ve just announced a huge economic package, that’s our focus.  There’s been a Senate report on the currency restriction bill that you’ve referred to and we are considering the recommendations of that committee report and once we’ve done that, we’ll have more to say. 

Journalist:

  Just quickly, Nicole.  Given that you represent the same constituents as Sam Daluk, what are you hearing from people that you deal with everyday about how that was handled?  Nicole Flint:  This matter is now before the SA Police and so I really don’t have any further comments.  Sam has stood down from his committees and from the Liberal Party and it will be dealt with by police. 

Journalist:

  Are you hearing anything from constituents?  Nicole Flint:  No, I’m not.  They’re supportive of Sam and as I’ve said, I really don’t wish to comment further on a matter that’s before the police. 

Journalist:

  Sorry, Michael, can I just ask you one more? Just strip back all the financial benefits of this, what’s it done for you mentally and has it given you a new lease on life?  Home-buyer:  Yeah it’s really exciting for me.  I was still thinking even as recently as November and December that I was still twelve to eighteen months away from owning my own home and obviously it’s brought that forward.  In probably a bit over twelve months away, my place will be ready to go and that means just less time renting and yeah, it’s really exciting. 

Journalist:

  Would you say it’s a weight off your shoulders?  Home-buyer:  Oh yeah, and like I mentioned before, if I’d saved the 20 per cent if the scheme didn’t exist, that would’ve been my absolute limit.  All of my money would’ve gone to a deposit and I wouldn’t have had any leftover cash to furnish my new place and will probably be able to buy a new car in the next twelve months as well. 

Sukkar:

  Thanks everyone.