A government scheme designed to help first-home buyers is increasingly being used by high-income earners, pushing up property prices and failing to assist those on lower incomes, new research has found.
High earners dominate the scheme
The First Home Guarantee, which allows eligible buyers to purchase a home with a deposit as low as 5% without paying lenders mortgage insurance, is being accessed by households earning more than A$200,000 a year, according to a study by the Australian Housing and Urban Research Institute (AHURI).
Nearly 40% of participants in the scheme had incomes in the top 20% nationally, the report found. The scheme was intended to help first-home buyers with modest incomes, but the data shows it is primarily benefiting the wealthy.
Impact on property prices
The influx of high-income buyers has contributed to rising house prices, the study said. Economists estimate the scheme has added between 1% and 3% to property values in major cities, making it harder for lower-income buyers to enter the market.
“The scheme is effectively subsidising people who could already afford to buy a home, while doing little to address housing affordability for those who need it most,” said Dr. Rachel Ong, lead author of the report.
Calls for reform
Housing advocates and some politicians are calling for tighter eligibility criteria, such as income caps or property price limits, to ensure the scheme targets genuine low- and moderate-income buyers.
“We need to redirect this support to those who are truly struggling to get a foothold in the market,” said Sarah Toohey, chief executive of the Community Housing Industry Association.
The federal government has defended the scheme, saying it has helped more than 100,000 people buy their first home. However, the AHURI report suggests the benefits are skewed toward higher-income households.
Broader housing affordability crisis
The findings come amid a deepening housing affordability crisis in Australia, where median house prices in Sydney and Melbourne have surged past A$1 million. First-home buyers face record-high prices and rising interest rates, making homeownership increasingly out of reach for many.
The report recommends that the government review the scheme’s design to ensure it delivers on its stated goal of helping those who need it most. Options include introducing sliding-scale guarantees based on income or restricting the scheme to properties below a certain price threshold.
