What They Aren't Telling You About the First Home Guarantee

Prices are climbing, tempers are flaring, and a simple promise—“buy with just a 5% deposit”—isn’t as simple as it sounds. Joe and Michael unpack the new rules around Australia’s First Home Guarantee and why it might not be the slam dunk the federal government believes. 

We draw a clean line between the federal guarantee and state‑based grants and stamp duty concessions, then walk through what that means in New South Wales, Victoria, and Queensland. 

The boys don't just complain, Joe provides practical solutions that might improve supply and demand. 

Follow us for more property news and mortgage advice!

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Episode Transcript

SPEAKER_02 (00:00):
We've got a perfect storm for the property prices in
Australia to becomeoverinflated.
The first thing that has notbeen explained to people in the
market is I am emotionallyaffected by this scheme.
It's an actual perfect stormthat's going to seriously
handicap people.

(00:21):
There's going to be some seriousdeflection and serious blame
because we have a seriousundersupply in the market.

SPEAKER_00 (00:27):
As much as it is a personal purchase, it's a
business purchase.
They are creating complicatedmesses that don't need to exist.
This is stupid.
Definitely do your research.
This is not a small decision.
You're not buying a handbag.
How do we create a fix to this?
Okay, here is how you create afix.

SPEAKER_01 (00:46):
Welcome to the finance show with Joe.
He's Joe, I'm Michael, and todaywe're going to be talking about
the property war that's going toemerge between investors and
first-time buyers.
And yes, it is a war, and I'llexplain why.
Joe, how are you going though?

SPEAKER_02 (00:57):
I'm I'm good, mate.
I'm good.
Um I'm uh agitated because look,guys, before we go onto any
podcast, and I do have topreface uh this advice is
general in nature.
Please always contact yourfinance specialist or seek
professional advice beforecommitting to anything.
Disclaimer done.
Before I go, this is the reasonwhy it's a fucking war.

(01:18):
Okay, and I've started withcursing.
You could see the visceralreaction, you could see how I am
emotionally affected.
We're calling it a property waruh because there's gonna be
first home buyers and investorson either side.
People need homes.

SPEAKER_01 (01:34):
Yep, people do need homes, it's true.

SPEAKER_02 (01:37):
The median age of a first home buyer in Australia
has increased.

SPEAKER_01 (01:42):
Yeah, it's 36 now from memory.
It used to be 34.

SPEAKER_02 (01:45):
And it's possibly even higher now.
So that 36-year-old statisticwas taken from last year.
I'm putting the money on.
I say it's 37, 38 now.
Yeah, it's I I am putting moneyon that because it was 34 and
then jumped up to 36.
And what's it gonna be thisyear?
Well, housing prices have onlygone up.
Yeah, interest rates are goingdown.

(02:05):
So that means people whoanyways, it's a fucking war.

SPEAKER_01 (02:09):
Yeah, okay.
Just for some context for thosewho don't understand why it's a
property war, in October, the uh5% deposit scheme, or whatever
they've decided to call it, um,is kicking in and it there's no
there's no caps, there's noincome caps, and there's no um,
there's no places.
You know how that you there waslike a set amount of places, I
should say it was like a hundredplaces for first-term buyers to

(02:30):
be eligible.
That's all gone now.
So every first-term buyer iseligible for this.

SPEAKER_02 (02:35):
They it was a hundred thousand people, okay,
could be placed into the scheme.
Yeah, well, it started at10,000, then it went to 30, then
went up to 50.
I think it went up to 100.
Don't quote me on this.
I don't like okay, if I getsomething wrong, go fuck
yourselves, anyways.

SPEAKER_01 (02:48):
Uh leave it in the comments.

SPEAKER_02 (02:50):
Yeah, but if I got that wrong, I from what I
remember, it was a hundred uh itcould have been a hundred
thousand.

SPEAKER_01 (02:55):
I think it was a hundred thousand.

SPEAKER_02 (02:57):
But that now they've gotten rid of that.
They've scrapped thatcompletely.
Okay.
The other changes that they'veincluded is it's no longer a
two-person purchasing propertytransaction.

SPEAKER_01 (03:08):
Yeah, any groups, big groups can buy it now.

SPEAKER_02 (03:10):
Four people can purchase.
Okay, so they've removed that uhrestriction as well, and they've
removed the income restrictionsaround this.
Yeah.
Now, the reason I am extremelyagitated by this scheme, and the
reason I'm extremely upset iswell, there's five key reasons.
Okay.

(03:30):
So we've brought up thesechanges, no income requirements,
there's no um uh limit onindividuals, um, there's no uh
income caps, like there's justso many things that they've
removed, and there's it's it'sit's frustrating.

SPEAKER_01 (03:43):
Because but by the way, this sounds good on paper.

SPEAKER_02 (03:46):
It's it's fantastic on paper.

SPEAKER_01 (03:47):
Yeah, like for first home buyers in a in a vacuum,
this is fantastic.

SPEAKER_02 (03:50):
Okay, so the first thing that has not been
explained to people in themarket, yeah, is this is a
federal scheme.
It is not correlated with thefirst home buyer's grant or
stamp duty concessions.

SPEAKER_01 (04:06):
And the just just again, just for clarity, the
first home buyer's grant is thatthat's when they give you a
deposit or give you a section ofa deposit or something like
that?

SPEAKER_02 (04:14):
So you used to purchase your first home, yeah.
They used to give you a$10,000,$15,000 um additive to uh help
you complete the transaction,but it was only up to a certain
limit.
So New South Wales, the firsthome owners grant still exists.

SPEAKER_01 (04:29):
Yeah.

SPEAKER_02 (04:30):
If you buy a block of land between$450,000 to
$600,000.
Good luck.
That's it.
The rest of the uh first homeowners grant is rolled into
stamp duty concessions now.
Yes, yes.
Now, what a stamp dutyconcession is, if you are a
first home buyer and you arepurchasing your first home and

(04:51):
you intend to live in it, yeah,what the stamp duty concession
would allow you to do ispurchase for up to$800,000 and
not have to pay any additionalstamp duty.

SPEAKER_01 (05:00):
Which is up to like $20,000 or something like that.

SPEAKER_02 (05:03):
Up to so when you get up to that$800,000, you're
sitting at about$28,000.
Yeah, yeah.
Okay, with or without.
And then between$850 and amillion, okay, you would receive
a concession.
You get a 50% discount, 40%discount, depending how high the
property value was, would be howmuch you're paying for stamp
duty.
Once you hit that million dollarthreshold, those stamp duty

(05:24):
concessions don't exist.
So if you use the first homeguarantee, which is purchasing
with a 5% deposit, okay, topurchase something for a million
dollars, it's not just a 5%deposit, you need to pay$50,000
for your deposit, and thenyou've got to pay another$43,000

(05:45):
for your stamp duty.
And that's just in New SouthWales.

SPEAKER_01 (05:47):
Yeah, it's different, it varies state by
state.

SPEAKER_02 (05:49):
Well, I've got these memorized because I've done
three videos on this now.
Yeah, okay.
So, for example, with Victoria,the maximum you can use the
first home guarantee for is$950,000.
Your deposit's gonna be$47,500,but your stamp duty is$52,000.
So you're not buying with a 5%deposit.
If anything, your stamp duty isworth more.

SPEAKER_01 (06:09):
Yeah.
If you decide to use the 5%deposit scheme, you are not
eligible for stamp deposit.

SPEAKER_02 (06:17):
No, you can't no, you can't.
You can get stamp dutyconcession, but up to the
concession limit.

SPEAKER_01 (06:22):
Limit, okay, which is which is under a million.

SPEAKER_02 (06:24):
Uh it depends state by state.

SPEAKER_01 (06:25):
State by state.
Let's say New South Wales is.

SPEAKER_02 (06:27):
New South Wales is a million dollars and under.
Okay.
So you could go up to a milliondollars.
Um, Queensland, for example, ifyou are purchasing a newly built
property, it's up to a milliondollars, no stamp duty.
Okay.
But if it's existing, you've gotto pay stamp duty.
Okay.
And their concession goes up to700 or 800,000.
I can't remember that oneparticularly off by heart.

SPEAKER_01 (06:48):
Yeah.

SPEAKER_02 (06:48):
But what I'm trying to say is with the first home
guarantee, all I have seen isyou can buy with just a 5%
deposit.
You can buy with just a 5%.
Yeah.
And I'm sitting there and I'mlike, well, no.
You have the leader of ourcountry using TikTok and
Instagram to enable our youth togo and get pre-approvals with

(07:09):
just a 5% deposit.
A lot of the times, if you'recalling up CBA or you're calling
up NAB, or you're calling up,you know, a large-scale
brokerage and you're not dealingwith, you know, uh people that
have been in the industry fortwo, three years, right?
Sometimes they might forget toask the question Do you have
money for stamp duty?

(07:29):
They're trying to pump theirnumbers up.
They're trying to get as high ofsales or commissions as
possible.
So people do forget to ask thisquestion because they're so
excited.
They're like, oh, we're gonnaget so many more customers.
Yeah.
If stamp duty costs more thanwhat the deposit is, yeah, like
it does in Victoria or it doesright now in New South Wales,

(07:50):
then you're enabling the youthto go and purchase properties
and then think to themselves,oh, it's just a 5% deposit.
And then when it comes time togo to the formal approval
process, guess what happens?
It's not just a 5% deposit, it'sa 5% deposit plus stamp duty.
So you're gonna see a lot ofpeople go into financial
hardship just to be able toacquire a property.

SPEAKER_01 (08:11):
And it's more likely to happen too in Sydney,
particularly, because they'veincreased the cap, the property
price cap to 1.5 million, whichobviously under over a million
stamp duty concessions no longerapply.

SPEAKER_02 (08:23):
Correct.
Yeah.
So you're going to see a lot ofpeople struggle.

SPEAKER_01 (08:26):
Yeah, and with the and with the median house price
at 1.2 or 1.6 or whatever itwas, it's pretty likely that you
will reach that threshold.

SPEAKER_02 (08:34):
And we've got a perfect storm for the property
prices in Australia to becomeoverinflated.
What do I mean by this?
Well, when we have a migrationof 40,000 people, a net
migration of 40,000 people permonth, okay, we are only
approving and dwelling a hundreduh uh approving and building a
hundred and seventy thousand newdwellings a year, two to one.

(08:57):
Okay, that makes sense for newpeople coming in, but we need to
be building 170,000 dwellingsfor the people coming in, and
then 170,000 dwellings for thepeople that are already here.
We are so undersupplied when itcomes to property that the
prices keep going up.
All this 5% deposit scheme hasdone.