The Albanese government has announced a substantial boost to its Help to Buy scheme, expanding eligibility for first-home buyers in Melbourne and raising the property purchase cap. This initiative is intended to improve home affordability, but it has sparked renewed calls for the Victorian government to revisit its stamp duty assistance program.
The Help to Buy scheme, which supports first-home buyers and single parents with deposits as low as 2%, is to receive an additional $800 million in funding, allowing buyers to purchase homes up to $950,000, a jump from the previous cap of $850,000.
This change reflects a concerted effort to ease the pressure on homebuyers as market prices continue to rise. However, industry leaders are now urging the state government to adjust its own support schemes to better align with the evolving needs of first-time buyers.
Federal Boost and Growing Demand for Housing
The Albanese government’s move to extend the Help to Buy program forms part of a broader effort to assist homebuyers amid rising house prices, particularly in Melbourne.
According to the Real Estate Institute of Victoria (REIV), first-home buyers have already shown a strong presence in Melbourne’s property market, with recent data revealing that more than 10,000 first-time buyers signed up for loans in the final quarter of 2024. This represents over 40% of all new loans in the state.
The new funding allows Melbourne buyers to purchase homes worth $58,000 more than the city’s current median house price of $892,000, bringing some relief to those struggling to enter the market.
However, experts like Kelly Ryan, the REIV’s CEO, argue that the Victorian government’s current stamp duty assistance cap of $750,000, which has not changed since 2017, is inadequate for today’s market conditions.
The REIV suggests that lifting the cap would help bridge the affordability gap, especially as prices continue to outpace the thresholds of existing assistance programs.
A Call for Broader Reform in Victoria
The REIV is calling on the Victorian government to take into account a more comprehensive reform of its stamp duty system as the Albanese government expands assistance for first-time homebuyers.
Ryan emphasized that many homeowners find the current stamp duty structure to be a major impediment, especially when paired with other issues related to housing affordability.
She argues that the tax needs a comprehensive review, as it contributes to people holding onto homes longer than necessary, thus limiting available housing stock.
Further complicating the issue is the increasing number of property investors exiting the market. Jeremy Tyrell, a chief auctioneer with Ray White, stressed the importance of incentivising more investors to stay, as their presence plays a crucial role in boosting the supply of rental properties.
Tyrell’s comments underscore the need for coordinated action across federal and state governments to address both homeownership and rental affordability simultaneously.
