Keystart a game changer for WA home buyers

Changes to Keystart loan borrowing limits will put affordable real estate within reach of more West Australian home buyers.

The family dog joins in for a game of multigenerational backyard cricket.
Levelling the playing field: Keystart home loans are now available for properties worth up to $560,000. (Image source: Shutterstock.com)

There is no doubt that across Australia, the dream of home ownership is becoming more distant for more people. Cost of living pressures, the rising cost of housing and high rental costs mean that more people than ever before are requiring some form of housing assistance.

Here in Western Australia, we are very lucky to have access to a State Government supported low deposit lending option offered by Keystart.

While operating under an independent Board, Keystart is primarily funded by the WA Treasury Corporation.

Among a range of products including a shared equity scheme, Keystart offers eligible home buyers access to a low deposit home loan, with as low as a 2 per cent deposit and no lenders mortgage insurance.

For many home buyers trying to get their foot on the property ladder, a low deposit loan is a significant leg up, with high rents and increasing living costs making it difficult for many people, particularly those on lower incomes, to save tens of thousands of dollars for a deposit with a standard lender.

In order to qualify for a Keystart loan, singles or couples need to meet maximum income criteria and purchase a home within the maximum value cap.

Loan limit increased

In good news for those considering purchasing a home, WA Premier Mark McGowan and Housing Minister John Carey recently announced that Keystart home loans would now be available for properties worth up to $560,000. This is an increase from $480,000 previously and much more reflective of the current average house price in Perth.

An important aspect of lifting the home value threshold is in the context of the WA State Government’s urban infill agenda. While still relatively limiting, the changes will allow more people to purchase in established suburbs that may have previously been over the maximum price range.

The new maximum price cap, in conjunction with measures such as the Urban Connect Home Loan, which is specifically aimed at purchasing in infill areas, are a step in the right direction as we look to support more people into home ownership in a range of areas.

The Urban Connect Home Loan pilot was announced in July 2022 and is providing 300 home loans to Western Australians earning under the income thresholds to buy two or more-bedroom apartments for $650,000 or less. The homes must be close to train station precincts and located within the inner metropolitan region.

Getting back to the most recent move to lift the value threshold for homes eligible for a Keystart loan, UDIA WA has made a recommendation in its State Budget Submission for 2023-24 that it believes will ensure Keystart loans keep up with the rising cost of housing into the longer term.

UDIA WA regard it as critical that the WA State Government maintains the eligibility threshold criteria for Keystart loans through index linking against the median house price within that particular housing market. 

That means, ensuring that the value threshold is constantly monitored and lifted when necessary to always keep in line with the cost of housing.

We would also like to see further funding committed to extending the Urban Connect Home Loan product so more buyers can benefit from that scheme.

I am looking forward to seeing how the McGowan Government looks to continue to address housing affordability across a range of levers in the upcoming State Budget.

UDIA WA’s State Budget Submission includes a range of recommendations aimed at enhancing WA’s liveability and economic performance.

WA records strong population growth

The Keystart changes come as the latest population growth figures highlight the increased competition for property in Western Australia.

The state recorded the second fastest rate of population growth (0.43 per cent) after Queensland (0.49 per cent) across all States and Territories in the June Quarter 2022, according to the latest statistics from the Australian Bureau of Statistics.

With a net addition of 11,877 persons, this quarterly population growth quantum was 18 per cent higher than the 20-year WA average, and the largest net increase in population recorded since the onset of Covid in March 2020.

Underpinning WA’s solid population growth was the ongoing strength in the return of overseas migration with almost 6,000 net overseas migrant gains recorded in the June quarter.

Importantly for the construction sector, while the Federal government has made significant inroads in processing the backlog of skilled worker visa applications (critical to addressing the roughly 33,000 job vacancies across the national construction sector) Australia is still 18 per cent down on the long run average of permanent skilled visa and 29 per cent down on temporary visa holders at a national scale.

Article Q&A

What is Keystart?

Keystart offers eligible home Western Australian property buyers access to a low deposit home loan, with as low as a 2 per cent deposit and no lenders mortgage insurance. In order to qualify for a Keystart loan, singles or couples need to meet maximum income criteria and purchase a home within the maximum value cap.

What is the most that can be paid for a new home under Keystart?

WA Premier Mark McGowan and Housing Minister John Carey recently announced that Keystart home loans would now be available for properties worth up to $560,000. This is an increase from $480,000 previously and much more reflective of the current average house price in Perth.

What is Western Australia's population growth rate?

Western Australia recorded the second fastest rate of population growth (0.43%) after Queensland (0.49%) across all States and Territories in the June Quarter 2022, according to the latest statistics from the Australian Bureau of Statistics. Western Australia's population in 2022 is estimated to be 2.69 million people.

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