What A Labor Win Means For Inner West And Inner-City Property

June 3rd, 2022 - by Brad Gillespie

Labor’s election win means the Help to Buy scheme should soon become a reality.

We explore how it works and what it means if you’re looking to buy in Sydney’s inner city and inner west.

How the Help to Buy scheme works

Going into the election, both major parties identified housing affordability as a key issue, especially in our major cities.

The Coalition’s response was to announce a ‘Super Home Buyer Scheme’ policy, which would allow first home buyers to dip into their super savings to pay for a deposit.

However, the Australian Labor Party was ultimately elected, and their proposal was the Help to Buy Scheme. Under this, the government will actually buy and own part of a property, which the homeowner can eventually buy from it.

The benefits of the Help to Buy scheme

The scheme, which has the potential to be significantly more generous than existing First Home Buyer Schemes, allows home buyers to purchase with a deposit as low as 2% of the purchase price. The government then buys up to 30% of the value of an existing home or 40% of the value of a new one.

The result is that a home buyer can potentially get a foot on the property ladder much sooner and with a substantially lower mortgage, although they obviously won’t have the same level of equity in the home.

At the same time, unlike measures that Labor has previously proposed - such as abolishing negative gearing and reducing the CGT discount on the property - the scheme should not impact prices negatively.

Maximum values and income caps

Help to Buy will be limited to 10,000 places a year and applicants must have an income below $90,000 if buying alone and $120,000 if buying jointly. The property they’re purchasing must also have a value of under $950,000 if it’s located in the Sydney metropolitan area.

And, if a homeowner exceeds the income thresholds for two consecutive years, they need to start paying the government back, either partly or in full.

How will the scheme work in the inner west and Sydney’s inner-city?

Our new Prime Minister, Anthony Albanese, isn’t just one of our local members. He’s also very much a local - currently living in the inner west he was famously brought up by a single mother in public housing in Camperdown.

The great news is that, unlike many of the former or existing home buyer schemes, this one should actually place a lot of local properties within reach of people who otherwise may not be able to afford to buy here.

For instance, if a property is valued at $900,000, a low-to-middle income buyer could potentially own it by having to pay $630,000 (assuming the government takes a 30% stake).

With a two per cent deposit of $12,600 and a 30-year home loan at 3% interest, that would mean a monthly mortgage of around $2,600.

If they were to pay full price they would need to save a 20% deposit of $180,000 to avoid LMI and then face mortgage repayments of over $3,000 a week based on the same terms.

What can you buy for under the cap in the inner west and inner-city Sydney?

If you’re looking to take advantage of the scheme, there are many properties you could potentially afford to buy in the inner city and inner west. Here are some examples of what your money might buy based on our recent sales.

Want more?

Contact our team today to find out more about how we can help you buy and sell in Sydney’s inner city and inner west.

Photo credits:
https://commons.wikimedia.org/wiki/File:Anthony_Albanese_at_Hyde_Park_2013.jpg
https://commons.wikimedia.org/wiki/File:Anthony_Albanese_2013_(cropped).jpg
https://commons.wikimedia.org/wiki/File:Australian_Labor_Party_Leader_Anthony_Albanese_MP_(cropped_-_tight).jpg