Labor will increase the income and price caps for its signature Help to Buy scheme as part of next week’s budget, which it has promised will deliver cost-of-living relief.
Under the shared equity scheme, the commonwealth provides first home buyers with 30% of the purchase price of an existing home, or 40% for a new home.
The first home buyer needs to contribute at least a 2% deposit. The scheme is capped at 10,000 places a year, with a total of 40,000 places over four years.
The housing minister, Clare O’Neil, said that under the changes, “most first home buyers are 1742607908 eligible”.
Income caps will be increased from $90,000 to $100,000 for single applicants, and from $120,000 to $160,000 for joint applicants and single parents. Property price caps will also be increased in line with the average house price in each state and territory, rather than the price of dwellings, which include all residential properties such as apartments and units.
“In Brisbane, for example, we’re raising property price caps from what were $700,000 to now $1m,” O’Neil told reporters on Saturday. “In Melbourne from $850,000 to $950,000, and in Sydney from $950,000 to $1.3m.
“This today will reflect in almost all circumstances the average house price in those capital cities.”
For NSW, the price cap is set at $1.3m rather than the median house price – about $1.5m – to ensure prices remain within the borrowing capacity of first home buyers.
O’Neil said a lot of young Australians “can’t see themselves ever owning a home of their own, and one of our government’s goals is to turn that around”.
“Help to Buy is going to be a very important pathway for many Australians to get into home ownership. We expect the scheme will be really, really popular.”
The government will increase its equity investment in the scheme by $800m, from $5.5bn to $6.3bn, to support the changes.
The government also announced $54m would be allocated in the budget to supercharge prefabricated and modular home construction, which it says can be built up to 50% faster than traditionally built homes.
Help to Buy passed the Senate last November with the help of the Greens, who unsuccessfully had pushed for a number of concessions. This was after the Greens and Coalition previously teamed up to delay the bill in the Senate in September.
The Greens had called on the government to reform negative gearing and capital gains tax concessions in return for their support on Help to Buy, but later reduced their demands, instead asking for an extra 25,000 social and affordable homes.
The Greens eventually helped Labor pass the legislation without their concessions, vowing to pursue these using their balance of power in the event of a minority government after the next election.
The upcoming federal budget, to be delivered by the treasurer, Jim Chalmers, on Tuesday, is widely tipped to include some support for households, including another round of $300 energy rebates.
The opposition leader, Peter Dutton, is facing internal pressure to match any cost-of-living relief offered in the budget, with one Coalition MP saying: “If Labor is offering cost-of-living [relief] in the budget, it is nearly impossible to see us not matching that.”
The Help to Buy scheme will open for applications in late 2025.
