Victoria launches shared equity scheme for homebuyers

Victorians who don’t own property could be eligible for a 25 per cent contribution to the purchase price of a home, under a $500 million initiative unveiled by the state government.

Treasurer Tim Pallas today launched the Victorian Homebuyer Fund, a shared equity arrangement designed to make it easier for people to buy a home.

Participants in the scheme only require a deposit of 5 per cent, with the state government to provide up to 25 per cent of the purchase price in exchange for a proportionate share in the property.

Aboriginal and Torres Strait Islanders can buy with a deposit as low as 3.5 per cent and receive a state government contribution of up to 35 per cent, for a commensurate share in the property.

Participants can purchase anywhere in Melbourne and more than 40 regional towns, while the value of the property is capped at $950,000 in Melbourne and Geelong and $600,000 in country locations.

Income limits apply, with singles earning $125,000 or less eligible for the scheme, or $200,000 or less for joint applicants.

The scheme is open to anyone who does not own any interest in any property asset at the time of purchase.

Mr Pallas said the fund was expected to help more than 3,000 Victorians become homeowners.

“The pandemic has underscored the value of a secure, safe home to call your own - that’s what this program will provide for thousands of Victorians,” he said.

“This will make it easier to secure your own home and we’re proud to play our part in helping Victorians realise this dream.”

Property Council of Australia Victoria executive director Danni Hunter, however, said the initiative would do little to address the issues behind Victoria’s housing affordability crisis.

Ms Hunter said the establishment of the fund was evidence that home ownership was out of reach for many Victorian families.

“This has only been exacerbated by the increases in property taxes under this government,” Ms Hunter said.

“The government will shortly introduce another new tax, the Windfall Gains tax, a massive 50 per cent tax on rezoned land and the ninth new property tax under the Andrews government.

“Victorian families will be the biggest loser with the cost of housing to increase significantly as a result of the tax at a time when the booming housing market has never been tougher for more Victorians.”

Ms Hunter said the state government would better address housing affordability by concentrating its initiatives on increasing the supply of new housing. 

“It is a lack of supply of new homes, coupled with exorbitant property taxes, that is driving home ownership beyond the reach of many prospective first-home buyers, and any measure that does not seek to address this fails to properly address housing affordability,” Ms Hunter said.