Goal 5: Increasing Affordable Home Ownership

This goal focuses on how the ACT Government will increase the supply of affordable homes for purchase, target them to households most in need, and facilitate new financing and occupancy models.

Key objectives

Key opportunities

Despite nationwide falls in homeownership over the previous 10 years, the ACT's strong economic and employment growth has seen a very slight increase in the number of households either paying off a mortgage or owning their home outright (65.4% of households).

House to income ratio: in 2011, the typical Canberra household needed 4.8 times its annual income to purchase a median priced house but in 2016 this increased to 5.7 times.However, in line with national trends, in 2011, the typical Canberra household needed 4.8 times its annual income to purchase a median priced house but in 2016 this increased to 5.7 times. While many Canberra households have been able to absorb these increases, a growing number of low income households have not.

Home ownership rates among the Territory's lowest 40% of income households is at 54% as the availability of lower cost homes for purchase remains very limited. Of the 9030 homes sold in 2017, only 160 were within reach of the lowest 20% of household incomes; of these, the majority were small (studio/single or two bedroom) apartments or town houses. For households in the second lowest 20% of incomes, availability improved, however only 3694 homes were regarded as affordable to these families over this period. Of these, 3694 homes, approximately 15% were detached houses and 85% were multiunit dwellings.

Aside from a limited supply of low cost homes for purchase, households are subject to Federal tax settings and have had limited options in respect to innovative finance products and alternative occupancy models, both of which exist in other states and can assist in lowering both the overall cost of housing and the barriers to entry.

Increasing home ownership among low income households has many advantages beyond the financial and social benefits to the household. By enabling better pathways to home purchase for low income earners, the rate of 'churn' within the social and affordable housing sectors can improve.

The ACT Housing Strategy sets the platform for enabling an efficient housing market through the release of an appropriate supply of land and putting in place mechanisms for increasing housing choice and diversity. The strategy goes further, with initiatives that will lower the financial barriers to entry, target opportunities to low income households, promote supports that are currently available to specific groups, and keep affordable housing available to households in need.

Work with industry to develop alternative housing options including materials, designs and delivery methods - ACT Property Council workshop

Goal 5: Objectives and Actions

Objective 5A: Provide more affordable homes for purchase

The ACT Housing Strategy builds on the government's commitment to providing home ownership opportunities to low income households.

As part of the commitment to dedicate at least 15% of the indicative land release program for public, community and affordable housing, the Government will set an annual target to increase home purchase opportunities on government land, in a variety of locations across the city.

The government will also investigate mechanisms that limit windfall gains on the resale of these properties to limit speculation and keep them under the ownership of low income families over a longer time period.

New categories relating to the number of bedrooms will be investigated as part of the government's affordable home purchase initiative in order to better align the demand for affordable homes with the future supply. To maintain consistency, this work will run in parallel with the finalisation of the apartment and attached housing design guides.

Two communication projects will highlight the opportunities available to low income families in saving for a home and in accessing low cost finance. These are the Australian Government's new First Home Super Saver Scheme and Indigenous Business Australia Housing Loans.

Consistent with the actions that aim to grow the supply of affordable rental housing, the ACT Government will encourage the provision of affordable home purchase properties within the private sector by considering financial and planning incentives, and will consider what role it might play in the construction and sale of affordable home purchase properties.

Actions

Objective 5B: Increase home ownership through alternative finance and occupancy models

Improving access to home ownership through alternative financing models is an important objective of the ACT Housing Strategy.

To lower the entry costs and home loan repayments for low income households, the government will investigate the feasibility and program design of a shared equity product. The product will be primarily aimed at low income households and, in particular, those currently in the community rental sector looking to transition into home ownership. Such a model could be considered in relation to land releases in future years.

An expansion of the land rent scheme will be investigated with a view to allowing home owners to build equity in the land through a stair casing approach.

Consistent with the innovative occupancy and ownership ideas being progressed under the government's demonstration housing project, the ACT Housing Strategy encourages seed funding for co-housing projects under the Affordable Housing Innovation Fund.

Actions

Shared equity is being investigated for expansion as part of the solution to make Canberra's housing more affordable for lower income homebuyers. Government-backed shared equity arrangements and similar schemes are already operating in Western Australia, South Australia and Tasmania, and are being investigated in Victoria. In the ACT, a shared equity program is run for public housing tenants through Housing ACT, however shared equity is not currently available within the affordable housing market.

Shared equity schemes allow a customer/buyer to obtain part equity in a home by sharing the overall cost with an equity partner, such as a financial institution or a government backed provider. The equity partner helps to reduce costs to the buyer by reducing the mortgage by a set percentage (between 25% and 75% of the purchase price) and reducing the size of the deposit required. The buyer is responsible for servicing their portion of the mortgage, and the equity provider services the remainder. At a pre-agreed time, the loan held by the equity provider will be made available for service or pay out to the buyer. In some schemes, the buyer has an opportunity to stair case payments over time, which gradually increases the proportion of the equity split in their favour. At the time of sale, the equity partner recoups their equity loan plus a proportion of the capital gain.

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