NHFIC and CBA unveil new trends and insights into first home buyer market

The National Housing Finance and Investment Corporation (NHFIC) and Commonwealth Bank (CBA) have unveiled their second data collaboration, revealing first home buyers under the Home Guarantee Scheme (HGS) are in strong positions despite the wider market and economic turmoil.

“NHFIC is proud to work collaboratively with major banks to further understand the value of the Home Guarantee Scheme,” said NHFIC chief program officer home ownership, Jennifer Chew.

“This research demonstrates the benefits of the HGS in helping more Australians into homes. We are proud to have helped over 100,000 people into homes, and with the recent expansions to the eligibility criteria and Participating Lender panel, we hope to continue to help many more.”

The analysis is for the period from 1 January 2023 to 31 May 2023.

What is the Home Guarantee Scheme?

Administered by the NHFIC, the scheme is an Australian Government initiaitve that helps eligible home buyers by lowering some barriers to home ownership.

The HGS includes three types of guarantees, including First Home Guarantee (FHBG), Regional First Home Buyer Guarantee (RFHBG), and the Family Home Guarantee (FHG). Home buyers can pay as little as 5% deposit under the FHBG and RFHBG, while home buyers under the FHG can purchase a home with as little a deposit as 2%.

Under the scheme, NHFIC provides a guarantee of up to 15% for the FHBG and RFHBG, or up to 18% for the FHG to a participating lender. This helps home buyers to avoid Lenders Mortgage Insurance (LMI).

What does the data say?

Home buyers under the HGS are in strong equity positions, and have seen desposit amounts only rise marginally.

Analysis showed that on average, HGS participants saw equity in their home grow broadly in line with long run price increases. This growth is despite the broader property market woes. The average equity gain per HGS guarantee is estimated to be around $82,000.

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The average despoit paid by first home buyers accessing the scheme only rose to $36,400 from $35,200 in 2020. This compares to a nearly 50% increase to $159,000 from $108,400 for the broader first home buyer market.

“Despite the challenging interest rate environment and dwelling price falls last year, it is encouraging that the (average) equity position of Home Guarantee Scheme participants appears to be holding up,” said NHFIC head of research, Hugh Hartigan.

“It is also interesting that deposits for first home buyers outside of the HGS have risen so strongly, which may indicate they have other ways of supplementing their savings.”

Among other highlights from the analysis, house prices for the HGS segment* were more robust. Declines in price were between 1% and 2%, while the broader housing market recorded 5% to 8% in value declines.

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* Defined as between 20th and 30th percentiles.

Article source: Queensland Property Investor