Up to 10,000 eligible buyers will be able to enter property market with a 5% deposit, with a $700,000 cap on houses in Sydney and $600,000 in Melbourne

This article is more than 10 months old

This article is more than 10 months old

The Morrison government has announced further details of its first-homebuyer deposit scheme, an election promise that stands to benefit up to 10,000 Australians each year.

The government has also announced price caps for support through the scheme, which is $700,000 for a house in Sydney and $600,000 in Melbourne.

First homebuyers will only have to save 5% of a deposit under the plan, with the federal government to guarantee the difference of a standard down payment.

The scheme will kick off from January next year, when eligible first home buyers will be able to apply to yet-to-be-announced lenders.

The Morrison government is seeking feedback on the draft framework for the scheme until 4 November.

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“There is no specific number of guarantee per jurisdiction, it will be on a first-in-best-dressed basis,” the finance minister, Mathias Cormann, told Sky News on Sunday.

The price caps differ per state and whether people are trying to buy a house in a capital city, large regional centre or regional area.

Capital cities and large regional centres are defined as areas with a population of more than 250,000, including the Gold Coast, Newcastle and Lake Macquarie, the Illawarra and Geelong.

There’s a flat price cap for the ACT ($500,000) and the Northern Territory ($375,000).

Eligible buyers will be able to enter the market without having the standard deposit of 20% under the scheme.

Housing minister Michael Sukkar says that while there’s no set number of deposit guarantees per state, the government will keep a close eye on demand to further shape the scheme.

“We’re not adding any layers of bureaucracy,” he told reporters in Melbourne.

“These are guarantees that banks are able to offer to customers. The banks will undertake the same credit checks, the same lending criteria that they would otherwise.”

Applicants must have earned less than $125,000 in the previous financial year as a single or $200,000 as a couple.

Property Council of Australia chief executive Ken Morrison says it’s important the settings are right for off-the-plan apartments or house-and-land packages.

“The scheme comes at a time of declining construction levels for new housing which has an impact on jobs, housing affordability and supply,” he said in a statement.

Property price caps

NSW

City or large regional centre: $700,000

Other areas: $450,000

Victoria

City or large regional centre: $600,000

Other areas: $375,000

Queensland

City or large regional centre: $475,000

Other areas: $400,000

Western Australia

City or large regional centre: $400,000

Other areas: $300,000

South Australia

City or large regional centre: $400,000

Other areas: $250,000

Tasmania

City or large regional centre: $400,000

Other areas: $300,000

ACT

$500,000

Northern Territory