The premium commuter now within reach of first-time buyers

Those looking to buy in the premium suburbs will need to take out a bigger loan and make higher repayments, especially if they use the low-deposit system, Wilson says.

“The other question is whether raising caps drives up prices in high-end homeownership areas,” he says.

Over the past 12 months, rents for houses in the capital have risen by almost 15%, while unit rents have climbed by more than 11%.

The competition between the Coalition and Labor has shifted to housing affordability in this federal election campaign, with both sides promising to do more to help first-time buyers get into the market.

Labor says it will supportt the higher caps of the low deposit program, as he has demanded for some time in the face of soaring prices over the past two years.

In last month’s federal budget, the enlarged government the number of places available in the program.

First-time homebuyers and others can buy new or existing homes with just 5% down payment, instead of the usual 20% needed to avoid paying expensive mortgage insurance from lenders.

Lenders’ mortgage loan insurance is payable on mortgages with a loan to valuation ratio (LVR) greater than 80% and can cost the borrower several thousand dollars.

The budget also included increased help for buyers of regional property, including non-owner buyers, to be introduced from October 1.

The Labor Party, if elected in the May 21 federal election, has promised to create a program to help 10,000 first buyers a year in regional Australia to buy a house.

He also pledged to create a $10 billion fund Australia Housing Futures Fund which would build 30,000 new social and affordable housing units in its first five years.

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The Coalition has pledged to provide an additional $2 billion in low-cost funding to community housing providers to build new social and affordable rental housing.

Property prices in Sydney and Melbourne are falling slightly and, if the trend continues, even more suburbs will have prices below the Low Deposit Scheme price caps.

However, first-time home buyers may still struggle to get a foot on the real estate ladder, with variable mortgage interest rates expected to start rising this year, possibly as early as June. The rapid increase in the cost of living is already reducing their ability to save and borrow.

Some analysts expect the slight house price declines in Sydney and Melbourne that have occurred so far this year to accelerate as rates rise.

Wilson says low-deposit programs help because often the biggest obstacle to buying a home is saving for the deposit.

However, rising rents and rising costs of living are making it harder for first-time homebuyers to save, Wilson says.

Over the past 12 months, rents for houses in the capital have risen by almost 15%, while unit rents have climbed by more than 11%.

The national vacancy rate for residential rental properties fell to just 1% in March – the lowest rate since 2006 – according to figures from SQM Research.

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