FIRST home buyers wanting to use the federal government’s new home loan deposit scheme to buy a house will be forced to look in areas outside of Brisbane’s sought-after inner city suburbs.
But there are plenty of bargains to be found, and if you are happy to settle for an apartment, most options are in premium suburbs within 10km of the CBD.
The analysts at realestate.com.au have crunched the numbers and revealed the most in-demand suburbs among first home buyers within a 20km radius of Brisbane’s CBD and below the scheme’s price cap of $475,000.
For that price, a first home buyer could be lucky enough to secure a loan for a three-bedroom house in Rocklea, which has a median house price of $409,000 and is only 9km from the CBD.
The other most popular first home buyer suburbs that qualify for the First Home Loan Deposit Scheme (FHLDS) are further from the city centre, however, such as Acacia Ridge, Petrie and Camira.
The most in-demand suburbs for apartments with median prices of $475,000 or less among first home buyers are Mount Gravatt East, Paddington and Herston — all within 10km of Brisbane’s CBD.
The FHLDS, which comes into effect on January 1, 2020, will allow 10,000 first home buyers to secure a property with as little as a 5 per cent deposit without paying lenders mortgage insurance (LMI).
Lenders usually require borrowers to take out a policy if the deposit is less than 20 per cent, with LMI often adding an extra $10,000 or so to first homebuyer costs.
Some agents are preparing for a wave of first buyers to flood the market in January and February, which could put upward pressure on home prices, according to.Realestate.com.au chief economist Nerida Conisbee.
“We saw a big rush of first home buyer activity from May to September, but it’s since tapered off, and I wonder if it that’s because people are waiting for the scheme,” Ms Conisbee said.
“If we do see a lot of activity in certain suburbs, it will have an upward impact on prices, but not as much as in 2015 when we had a surge in investor activity.”
Ms Conisbee said the suburbs that qualified for the scheme in Brisbane differed when it came to houses and units, with most houses in more industrial areas outside the 10km radius, but apartments available in more affluent suburbs.
“I think if you are a first home buyer, you need to make a personal decision as to what type of home you want to live in,” she said.
“If you really want to be in one of those premium suburbs and take advantage of the grant, you’re more than likely going to have to live in an apartment.”
Ms Conisbee said an influx of first home buyers moving in to a suburb had the potential to “dramatically change” it for the better.
“They create demand for better retailing and often the have energy to improve homes dramatically, so over time the suburb does begin to change,” she said.
But SQM Research managing director Louis Christopher said the scheme was unlikely to have much impact on the market.
“Relatively few first home buyers will qualify for it, and those that do will have to jump through a number of hoops,” Mr Christopher said.
“This will not push up prices.”
First home buyers Amber Williams, 19, and Mitchell Brown, 19, are hoping to qualify for the FHLDS.
Mr Brown said the young couple was in the process getting their finance approved so they could be ready to buy in the new year.
“We’ve always wanted to get a house, but didn’t think we could afford it until we heard about this and now we’ve been talking to a broker,” Mr Brown said.
“This has been a greenlight for us.”
Mr Brown said he had been saving for a deposit for nearly two years and was hoping to buy a house in Petrie or Warner.
Annabel Brooks of Ray White - Warner, is marketing the perfect first home buyer property at 5 Kulara Place, Petrie, where the median house price is $440,000.
Ms Brooks said she the announcement of the FHLDS had changed the mindset of many first home buyers.
“It’s created a bit more urgency,” Ms Brooks said.
“Nearly every first home buyer I talk to is gearing up to take advantage of the scheme.
“They also seem to be looking to be more decisive and become more active buyers.”
New research by PRDNationwide for the second half of 2019 found the Brisbane property market continues to be a prime market for first home buyers, with the under $500,000 price bracket reaching a record high percentage of available suburbs at 44 per cent.
That’s a significant increase compared with a year ago when buyers with a budget of $500,000 or less could only access 12.4 per cent of the market.
TOP 10 MOST IN DEMAND BRISBANE SUBURBS WHERE A HOUSE LOAN SHOULD QUALIFY FOR THE FIRST HOME LOAN DEPOSIT SCHEME
Rank Suburb Median house price
1. Rocklea $409,000
2. Acacia Ridge $395,000
3. Petrie $440,000
4. Camira $435,000
5. Alexandra Hills $457,500
6. Regents Park $400,000
7. Zillmere $460,000
8. Chuwar $415,000
9. Margate $450,000
10. Forest Lake $440,000
TOP 10 MOST IN DEMAND BRISBANE SUBURBS WHERE A UNIT LOAN SHOULD QUALIFY FOR THE FIRST HOME LOAN DEPOSIT SCHEME
Rank Suburb Median unit price
1. Mount Gravatt East $392,000
2. Paddington $460,000
3. Herston $385,000
4. Ashgrove $443,500
5. Newmarket $420,000
6. Auchenflower $460,500
7. Carina Heights $440,000
8. Wishart $392,500
9. Morningside $450,000
10. Gordon Park $340,250
FIRST HOME LOAN DEPOSIT SCHEME EXPLAINER
*If you have saved 5 per cent of the purchase price of a property, the government will guarantee the remaining 15 per cent of the deposit required
*You still need to borrow 95 per cent, but can avoid LMI
*Your mortgage needs to be an owner-occupied loan with principal and interest repayments
*You will need to be a first home buyer — if you own an investment property you won’t be eligible — earning $125,000 ($200,000 for a couple) a year or less
*The scheme is limited to 10,000 borrowers
*The scheme is open to buyers of established properties
*You must buy a property valued at or below the threshold for your location
*The scheme starts on January 1, 2020
PRICE CAPS – First home loan deposit scheme
NSW - Sydney and regional centre $700,000
NSW - other including Jervis Bay and Norfolk Island $450,000
VIC - Melbourne and regional centre (Geelong) $600,000
VIC - other $375,000
QLD - Brisbane and regional centre (Gold Coast etc) $475,000
QLD - other $400,000
SA - Adelaide $400,000
SA - other $250,000
WA - Perth $400,000
WA - other including Christmas Island/Cocos Islands $300,000
Tas - Hobart $400,000
Tas - other $300,000
(Source: Australian Government, The Treasury)