The state government is expected to launch a shared equity loan scheme within the next three weeks in a bid to make housing more affordable for Western Australians.
The state government is expected to launch a shared equity loan scheme within the next three weeks in a bid to make housing more affordable for Western Australians.
The shared equity loan scheme is believed to be the first of its kind in WA and would follow a similar model to products offered in the UK, Japan and on the east coast of Australia.
WA Business News understands that the Department of Housing and Works will launch the shared-equity loan, to be called First Start, in about a fortnight.
It will be administered by the department’s low-deposit home loan provider, Keystart.
Providing a shared equity loan comes after Perth’s median house soared past Sydney’s in the December quarter to become the most expensive in the country.
WA Business News understands that the equity arrangement will involve the department buying up to 40 per cent of a property, leaving the home buyer to acquire a minimum of 60 per cent.
Based on Perth’s preliminary December median house price of $460,000, would-be purchasers will only be required to pay $276,000, which is a figure many analysts believe makes home ownership more accessible for first-time buyers, even if they only end up owning 60 per cent of the property.
The swelling property prices have made owning a home unaffordable for many Western Australians, with the number of first-time buyers dwindling from 25 per cent in 2001 to 12.4 per cent in November.
That has placed enormous pressure on Treasurer Eric Ripper to cut taxes and for Planning and Infrastructure Minister Alannah MacTiernan to free up land supply.
Shared equity loans, while relatively new to Australia, would help first-home buyers get on the property ladder, according to The Loans Café managing director Anne-Marie Syme.
“What other hope has the first-home buyer got?” she said. “Shared equity is not necessarily a bad thing, it just depends on level of shared equity and, like any other product, buyers need to ask themselves what are the consequences if they want to get out of it?”
BankWest head of mortgages John Rolfe said shared equity loans would be attractive for both first-time buyers and investors.
“For the first-home buyer it enables them to get in into the market without having to front up with as much cash or taking on as much debt by only buying a portion of the equity while someone else buys the rest,” he said
“They also attract investors who want to get into the residential property market.”
Mr Rolfe said most shared equity loan schemes included regular independent property valuations.
He said BankWest was not considering offering a shared equity product.
“It would be a big move for someone to do that,” Mr Rolfe said.
Keystart already operates a form of shared equity loan called GoodStart, which is a shared equity loan scheme designed to provide an affordable way for Homeswest tenants to purchase equity in their current rental property.
The scheme also extends to applicants on the Homeswest rental waiting list, who can purchase up to 70 per cent or more equity in Homeswest property in selected areas.
The state government has been assessing the possibility of broadening the shared-equity scheme for more than three months.
The NSW government is also believed to be considering offering a scheme. According to the NSW Centre for Affordable Housing website, the government has labelled the need for a viable shared equity model as a key priority.
