Australian Property News

First Home Savers Account Scheme failing

Posted on Friday, October 15 2010 at 3:20 PM

Most Australians don’t see the benefits of the Federal Government’s $1.2 billion First Home Saver Accounts (FHSA) scheme, according to the results of a national survey by mortgage broker Loan Market.

Nearly half the respondents hadn’t even heard of the scheme and 29 per cent said the requirement to keep savings in the account for four years before it can actually be used to buy a home was too long.

The FHSA scheme was launched two years ago with the intention of helping young Australians save for a home loan deposit. The government contributes 17 per cent on the first $5500 of individual contributions made each year.

Loan Market chief operating officer Dean Rushton says less than 20,000 accounts have been opened around Australia since the scheme started in October of 2008.

When the FHSA scheme was launched, he notes the government committed more than $1 billion towards it, with the aim of assisting more than 700,000 people within the first four years.

“It has attracted nowhere near the amount of interest anticipated,” he says.

“Despite the 2010 budget announcement by the Federal Government of draft laws to boost the flexibility of the scheme, it’s clear from our survey results that prospective homebuyers are unaware of the FHSA or still find it too complicated.

“Last month’s ABS (Australian Bureau of Statistics) results show that first homebuyers are struggling to get into the market and it’s time to admit that the First Home Saver Account has failed and needs some significant panel beating,” Rushton says.