LOCAL agents fear people will have to move further away from popular areas in the City of Logan, and prices of lower-end new properties might increase.
The comment comes in the wake of federal government plans to extend a home guarantee scheme for first home builders.
A 5% deposit on homes less than $650,000 aims to get first home buyers settled in a new home sooner and with a smaller deposit.
The government will guarantee part of the mortgage, meaning buyers do not need to pay expensive mortgage lender’s insurance.
This could drive up prices at the lower end of the market as more buyers come into the market, especially when relatively new homes are hard to come by and the demand for materials is outstripping supply.
Selling agent Beau Fillmore, Gold Class Century 21, said it is tough to predict whether this will happen.
He said the scheme could, however, put first home buyers in the tricky position of being out of pocket more than they can afford given the inflation of build costs.
“You see, the issue we have right now is that you’re going to be waiting for over 18 months for a home to be built now,” he said.
“Not only that, you’re having to go further out every year to be able to build something.”
Negative equity could then be an issue if the property value falls below the amount being borrowed and when expected interest rate rises come into force.
As a result, the borrower would need to still pay back the loan, while also paying the higher interest fees.
Mr Fillmore said this is possible.
“It could well become a tough situation, depending on how much of a deposit they were able to put down and also what their interest rate will be because they [the government] has already said they will be rising,” he said.
“The question is by how much? And by how much will that actually effect the lower income earner? Will they be able to continue with their repayments when it goes up?”
The scheme is available to individuals who earn up to $125,000 per year, and for couples who earn up to $200,000.
It applies to existing properties built on or after January 1st, 2020, and for new builds. The value of the property must not exceed $650,000 in Queensland.
Queensland’s peak real estate body, the REIQ, said it is a good step, but it will not come close to meeting the demand.
“This federal budget gets a tick of approval from us,” REIQ CEO Antonia Mercorella said.
“However, while expanding the Home Guarantee Scheme is a good start, it must be acknowledged that 50,000 places is not nearly enough to meet national demand.
“Considering there were nearly 17,000 first home buyer loans in Queensland alone in the year to January 2022, and 36,000 first home buyer loans in Queensland alone last financial year, you can see how 35,000 places nationally is not going to make much of a dent on demand.”
