Heading true south for a real FHB solution

by Miklos Bolza29 Mar 2017
Research has shown that HomeStart Finance, a low deposit lender backed by the South Australian government, has achieved highly positive results when compared to equivalent areas in other states.

The study, conducted by the University of Adelaide, showed the availability of finance through HomeStart resulted in higher rates of home ownership in selected regions around SA when compared to similar regions in NSW and Victoria.

The report looked at trends in low to middle income council areas such as Salisbury, Playford and Onkaparinga, and found that home ownership was boosted by up to 8% on equivalent NSW suburbs and by up to 6% on comparable Victorian suburbs.

John Oliver, chief executive officer of HomeStart Finance, said this suggests a similar scheme would translate into higher levels of home ownership in NSW and Victoria as well.

“The results clearly highlight that there is an important role for a low deposit lender like HomeStart, which offers options specifically designed to overcome the barriers to home ownership, including our shared equity product, which enables home buyers to borrow up to 30% more, and a loan specifically designed to help graduates into home ownership,” he said.

“The vast majority of home buyers we assist have good incomes and can afford to make home loan repayments, but are being prevented from entering the market because of factors such as not having enough money to meet the upfront costs of a home loan.”

Professor Ralf-Yves Zurbrugg, who co-authored the report, said that other states could benefit from having schemes such as HomeStart.

“The suburbs that have most benefited from HomeStart are those with low incomes that would otherwise be excluded from the market because, for example, not having enough deposit, despite being in every other way a credible borrower,” he said.

In the 28 years since establishment, HomeStart has helped almost 70,000 households purchase their first home. In the 2015/16 financial year, the lender saw a 17.5% increase in home loans, with almost 47% given to first home buyers.

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