Victorian Homebuyer Fund explained: Toorak gets nod, but popular regional spots left out

Elite suburbs like Toorak are eligible for a new state housing affordability initiative, but many popular regional spots are out. Here’s what you need to know about the Victorian Homebuyer Fund.

Portland is one of the most affordable coastal spots cleared for the HomeBuyer Fund, meaning eligible buyers could get government support to buy homes like 36 Avonmore Ave

The Victorian Homebuyer Fund will be available in Melbourne’s richest suburbs, where few homes can be bought under its $950,000 cap, but iconic towns along the Great Ocean Road and on Phillip Island have been left off.

Fine print for the new housing affordability scheme also requires those who use it to cough up any inheritances north of $10,000 to the state’s treasury, and requires approval from the government to buy out the state’s share within two years.

The $500m program commenced on October 8 and is open to any homebuyer struggling to break into the market, so long as they have a 5 per cent deposit, do not earn more than $125,000 as an individual or $200,000 as a household and don’t own a property or have any interests in one.

There is also a $950,000 cap on home prices for Melbourne and Geelong, or $600,000 for the rest of the state.

Treasury is expecting more than 3000 contributions up to $237,500 will be made via the scheme in the coming years.

While the majority will be in Melbourne, 42 regional areas including 524 suburbs are also eligible.

The Victorian Homebuyer Fund will be available in Melbourne’s richest suburbs, where few homes can be bought under its $950,000 cap, but iconic towns along the Great Ocean Road and on Phillip Island have been left off.

Fine print for the new housing affordability scheme also requires those who use it to cough up any inheritances north of $10,000 to the state’s treasury, and requires approval from the government to buy out the state’s share within two years.

The $500m program commenced on October 8 and is open to any homebuyer struggling to break into the market, so long as they have a 5 per cent deposit, do not earn more than $125,000 as an individual or $200,000 as a household and don’t own a property or have any interests in one.

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What makes a suburb expensive or affordable?

There is also a $950,000 cap on home prices for Melbourne and Geelong, or $600,000 for the rest of the state.

Treasury is expecting more than 3000 contributions up to $237,500 will be made via the scheme in the coming years.

While the majority will be in Melbourne, 42 regional areas including 524 suburbs are also eligible.–– ADVERTISEMENT ––about:blank

But even though Torquay and Jan Juc are included on the list, popular towns further west along the Great Ocean Road from Anglesea to Apollo Bay are not.

There is also a line in the sand excluding Phillip Island, but not San Remo on the mainland side of the bridge that connects to the popular holiday spot.

33A Phillip Island Rd, Surf Beach, is not eligible though has a more affordable price than San Remo homes nearby.

Buyers could access the Fund to purchase this home for sale at $359,000 at 10/6 Sapphire Way, San Remo.

Garth Lisle Property Consultants director Scott Lethbridge said San Remo prices had jumped in the past 18 months with little other than apartments left below $600,000, though there would be more affordable options in Surf Beach and Sunderland Bay on Phillip Island.

And with many of the island’s tourism operators living locally, younger buyers working on the island might now be tempted to look further afield to obtain the assistance.

While affordable coastal options are available around Portland, the state’s cheapest beach spots in the Golden Beach part of the state have been ruled out.

Towns savaged by Black Saturday fires including Kinglake on Melbourne’s fringe and Marysville are also out, despite growing populations and home prices.

The fund included eligible locations based on them having higher populations, forecasts for population growth and healthy property markets.

Real Estate Buyers Agents Association of Australia president Cate Bakos said she did not believe excluded markets would suffer or that rising prices would “skew the market” in those that are eligible.

10/789 Malvern Rd, Toorak, is one of the few homes for sale in the suburb for less than $950,000.

Even with an affordable $533,000 asking price, no fund support is available for 2/38 Falls Rd, Marysville.

However, Ms Bakos noted the public purse might be better off for some tourist destinations being excluded, while buyers could take a suburb being eligible as a vote of confidence in its prospects from the parliament.

“Holiday markets are more volatile,” she said.

“If the government has got this right and assessed risk, that’s an extra level of assurance for the buyer.”

Realestate.com.au data shows 16 Melbourne suburbs on the eligible list have median unit prices above the $950,000 cap.

With off-the-plan purchases barred, Ms Bakos said “there’s probably not a lot of value” in the scheme being available in suburbs like Deepdene where the median unit costs $1.7m or Toorak where a middle-of-the road unit costs $972,000.

“There might be small one-bedder apartments,” Ms Bakos said.

“But I don’t think someone of significant financial means will take advantage of it, as it’s means tested.”

47 Lansell Road, Toorak, sold at auction for more than $40m last weekend.

Even the once affordable Sunbury had a recent record sale at $2.5m for 50 Spavin Drive.

Real Estate Institute of Victoria president Adam Docking said he personally believed the scheme could raise prices, but noted first-home buyer assistance was definitely needed.

“Generally when the government announces some sort of grant you see an increase in prices, inflation, almost overnight,” Mr Docking said.

“But they do need assistance to get into the market. That gap of being able to save up for your first home is getting wider and wider.”

REIV regional director Renee Reynolds said the fund would be in demand in Geelong, where her agency is based, as the market was “increasing in leaps and bounds” and “a lot of people are priced out of the market”.

“I see more and more young adults just not in a position to buy and this is definitely an avenue to get in,” Ms Reynolds said.

A government spokesman said the scheme would be “sustainable”.

Buyers may decide to buy out the government’s share in a home “at market value over time”, or sell the property allowing the government to recollect their initial outlay as well as their share of any capital growth.

88 Gill Ave, California Gully, shows what would be available in the scheme with a $420,000-$450,000 asking price.

55 Loudon Circuit, Craigieburn, would be eligible for the scheme with a $460,000-$490,000 asking price well below the $950,000 metropolitan cap.

“Those funds will then be reinvested to help other aspiring homebuyers get into the property market,” they said.

“The Victorian Homebuyer Fund will be the key to get many Victorians into their homes sooner.”

There is additional support for Aboriginal and Torres Strait Islanders who can have up to 35 per cent of the home’s price paid by the government upfront, and only require a 3.5 per cent deposit to access the scheme.

Anyone who accesses the fund will need to complete annual reviews and begin paying out the government’s interest in the home if their income moves above the $125,000 or $200,000 cap for consecutive reviews, if they inherit or win $10,000 or more, or they increase their home loan.

The government will also have to approve a buyer’s plans to pay out the government’s contribution within the first two years.

It follows the $50m HomesVic pilot program that co-bought 335 homes alongside first-home buyers.

ELIGIBLE AREAS:

Bacchus Marsh, Bairnsdale, Ballarat, Bannockburn, Benalla and Bendigo;

Castlemaine, Clifton Springs, Colac and Creswick-Clunes;

Daylesford and Drouin;

Echuca;

Geelong and Gisborne;

Horsham and Inverloch-Wonthaggi;

Kilmore, Korumburra and Kyneton;

Latrobe, Leongatha and Leopold;

Maffra, Mansfield, Maryborough, Melbourne and Mildura;

Ocean Grove-Barwon Heads;

Portarlington and Portland;

Sale, Seymour, Shepparton and Swan Hill;

Trafalgar and Torquay;

Wallan, Wangaratta, Warragul, Warrnambool, Wodonga and Woodend;

Yarrawonga;