Financing first home ownership: modelling policy impacts at market and individual levels

The study, ‘Financing first home ownership: modelling policy impacts at market and individual levels’, undertaken for the Australian Housing and Urban Research Institute (AHURI) by researchers from Curtin University, University of Sydney and RMIT University, modelled the relationships between different housing finance conditions and people’s ability to buy their first home.

Nearly nine in ten aspiring first home buyers are locked out of home ownership due to borrowing constraints. The research also notes that the housing market could see the return of young or lower income households again if a persistent rise in interest rates leads to a decline in house prices.

Key Points

• Among aspiring first home buyers, only 11 per cent do not face borrowing constraints. Approximately 84 per cent of first home buyers face a downpayment constraint and 71 per cent face a repayment constraint.
• As interest rates fall, the increase in house prices reduces the home ownership rate despite lower borrowing costs.
• The application of lower income thresholds under the shared equity scheme results in expanded access by more financially disadvantaged Australians than the mortgage guarantee.

The Report

Financing first home ownership: modelling policy impacts at market and individual levels is available to be read.