Grading the Home Guarantee Scheme’s FY22–23 performance

Over the course of the 2022–23 financial year, one-third of all first home buyers were supported by the scheme, up from one in every seven the previous financial year. This increase coincided with a 39 per cent jump in the number of guarantees issued between FY21–22 and the following financial year, with approximately 32,500 Australians benefiting from the scheme during the latter period.

A core driver of the increased uptake of the scheme had been its expanded remit, the report flagged. At the beginning of the 2022–23 financial year, the First Home Buyer Guarantee (FHBG), the New Home Guarantee (NHG), and the Family Home Guarantee (FHG) were brought under the banner of the HGS. On 1 October 2022, the Regional First Home Buyer Guarantee (RFHBG) was launched as part of the scheme.

In a climate of increased economic scrutiny placed upon first home buyers, particularly by the Reserve Bank of Australia’s (RBA) rate hiking cycle of the last 18 months, Hugh Hartigan, head of research, data and analytics at the NHFIC, believes the scheme is more important now than ever.

“The broader macro-economic environment, with rapidly rising interest rates, has substantially decreased mortgage serviceability with flow on effects for affordability,” he said. “This has led to first home buyers relying more heavily (proportionally) on the scheme than in previous years”.

Between May 2022 and June 2023, the RBA enacted 12 cash rate increases, lifting the figure from the 0.10 per cent record low introduced at the end of 2020, to its current level of 4.10 per cent, and subsequently compounding the mortgage woes of existing borrowers and increasing serviceability pressures placed on prospective home buyers.

Half the places in the FHBG and RFHBG were filled by Australians aged under 30, with first home buyers aged 18 to 24 experiencing a large increase in engagement with their uptake of the FHBG scheme jumping from 3 per cent in FY21–22 to 13 per cent during the last fiscal year.

Jennifer Chew, NHFIC’s chief program officer, home ownership, believes the report “demonstrates how each year the scheme is helping more Australians, including key workers and those living in regional areas, buy their home sooner”.

The report found more than one-quarter (28 per cent) of guarantees issued under the scheme last financial year were dished out to key workers such as teachers, nurses and social workers, with the 7,721 guarantees issued to this crucial sector of the Australian society last financial year representing a 37 per cent increase from the previous financial year.

Of this key worker cohort, most applicants continue to be teachers (32 per cent), nurses (24 per cent) and social workers (19 per cent), with Defence Force workers utilising the scheme least (4 per cent) of any key worker group.

On the regional front, around 37 per cent of guarantees issued last financial year were for first home buyers in Australia’s regional pockets, with regions such as Townsville (722 guarantees) and central Queensland (612 guarantees) experiencing strong representation in these figures. Eight of the top 10 regions for scheme guarantees last financial year were also featured in the top 10 in 2021–22.

The largest portion of scheme guarantees were dished out in Perth’s North-West, where 1,059 were received last financial year, followed by the city’s South-East (938), and Melbourne’s West (927).

Moving forward, the scheme, which celebrated its 100,000th purchase in June, will operate with a greater expanded remit following changes introduced by the federal government in May.

As previously reported on REB, from 1 July 2023 elements of the scheme – including the FHBG, the RFHBG, and the Family Home Guarantee – have been expanded to allow friends, siblings and other families to jointly apply for the scheme’s benefits, while non-first home buyers who haven’t owned an Australian property in the last 10 years are now also eligible to enter the scheme.