First Home Buyer behaviour analysis

This analysis is a collaboration between NHFIC and its major bank panel lenders CBA and NAB and provides data insights on the operation of the Government’s Home Guarantee Scheme (HGS) since its inception in January 2020 to 31 May 2022, benchmarked against broader first home buyer data for the equivalent period.

Key points

  • The HGS has supported proportionally more single female buyers (54%) relative to the broader first home buyer (FHB) market (46%).
  • 84% of buyers who purchased a home, [with a deposit as little as two per cent] under the Family Home Guarantee (FHG) were single women with dependent children.    
  • Buyers under the HGS have been helped to overcome the deposit hurdle to purchase their home. The average loan size of the broader FHB market and recipients of HGS has been similar ($442,000 and $444,000 respectively), however the average purchase price of FHBs relative to HGS recipients has been 18% higher ($564,000 versus $478,000). This is because deposits for HGS recipients have been less than a third of FHBs more broadly ($34,000 and $122,000 respectively).
  • Less than 30% of HGS participants’ income was used for mortgage repayments for their new home. Around half the costs that were previously paid as rent are now mortgage principal payments, representing genuine savings in the form of home equity. 
  • The HGS assisted people to bring forward home ownership and build genuine savings, creating financial security. Buyers under the HGS have built up considerable equity, with those entering in early 2020 having up to 26% additional equity in their home (on average). Expressed in another way, a buyer who borrowed 95% of the purchase price would have reduced their dynamic loan-to-value ratio to under 70% (on average) in just over two years. For comparison, if house prices grew more in line with the 20-year average of 6.4% pa, HGS participants would have on average up to 21% additional equity.
  • HGS participants are building value in their own home through home improvements, on average spending more per transaction on construction (e.g. home improvements) post purchase of a property.