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Accessible finance key to unlocking housing affordability

housingaffordability housingaffordability
Reporter 4 minute read

Making finance available to first home buyers through a government-backed lender has resulted in higher rates of home ownership in South Australia, according to new research.

New findings from the University of Adelaide have found that the availability of finance through state government-backed low deposit lender HomeStart Finance has resulted in higher rates of home ownership in South Australian regions, compared to equivalent areas in Victoria and NSW.

It found that Homestart Finance’s presence in low to middle income council areas of Salisbury, Playford and Onkaparinga, increased home ownership by up to 8 per cent on equivalent NSW suburbs, and by up to 6 per cent on comparable Victorian suburbs.

Commenting on the research, HomeStart Finance chief executive officer John Oliver said the results highlight that there is an important role for low deposit lenders, which offer options specifically designed to overcome barriers to home ownership, such as a shared equity product that enables home buyers to borrow up to 30 per cent more and accepting rental history as a form of savings.

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“The vast majority of home buyers we assist have good incomes and can afford to make home loan repayments, but are being prevented from entering the market because of factors such as not having enough money to meet the upfront costs of a home loan,” he noted.

It is estimated that 85 per cent of HomeStart’s customers would not have been able to access finance from a bank when they purchased their home.

Co-author of the research report Professor Ralf-Yves Zurbrugg added that the research findings show that other states could benefit from having lenders similar to HomeStart. Only Western Australia, with its KeyStart scheme, operates a similar model, and Victoria has recently announced a number of finance measures to assist home buyers.

“The suburbs that have most benefited from HomeStart are those with low incomes that would otherwise be excluded from the market because, for example, not having enough deposit, despite being in every other way a credible borrower,” he pointed out.

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Accessible finance key to unlocking housing affordability
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