In the early-90s I secured my first home loan at Westpac’s Willetton branch. I was in my early twenties, had just finished my university degree and interest rates were about 18%. I was eager to get my foot in the door of the property market, and with the average Perth house price hovering around $125,000, it was pretty achievable.
Fast forward to 2003, and in Australia we were seeing the price of housing increase by about 60% relative to income.
Today, home ownership rates for younger Australians are 45% less than they were 30 years ago despite being in a situation where about four million homeowners in Australia have never experienced a rate rise.
“As data provided by the Reserve Bank of Australia (RBA), the Treasury and the Australian Bureau of Statistics (ABS) shows, home ownership, one of the building blocks of Australian society, has been falling for the last 30 years. In my view, this represents an urgent moral call for action by governments of all levels to restore the Australian dream for this generation and the ones that follow.
” Mr Jason Falinski MP, The Chair of House of Representatives Standing Committee on Tax and Revenue, on commencing the inquiry into housing affordability and supply in Australia.
The great Australian dream of owning a home is less accessible than ever before, but we cannot let the positive economic and social outcomes associated with home ownership slip from our grip.
Government intervention to stabilise the state of affordable home ownership for Australians appears to be a sensible solution and will set housing outcomes back on a positive trajectory, but the longevity of any scheme will be reliant on successful collaboration with finance and industry.
Government assisted housing is not a new phenomenon, nor is Keystart as an operator in WA. But, crucial to the sustainability and success of housing initiatives is the affordability and accessibility of the homes they are facilitating ownership of.
Since 1989, Keystart has supported more than 118,000 Western Australians in becoming homeowners, maintaining clear criteria for customer eligibility to ensure the longevity and success of the scheme. The institution has stood the test of time; five changes in State Government, seven premiers, and countless portfolio reshuffles. In addition to riding the waves of politics, operations have withstood the 1997 Asian Financial Crisis, the 2007 Global Financial Crisis, and now Covid-19.
I have no hesitation in claiming that Keystart would be one of the most successful pieces of public policy in this state, if not in Australia. A claim which is reinforced each time I have the privilege of speaking at national and international housing forums.
Critical to the sustainability and success of housing support, is identifying the audience and designing the product for them. There is no one-size-fits-all when it comes to home ownership. It is our job as policy drivers and decision makers to identify a number of solutions that can work cohesively to improve home ownership outcomes in Australia.
Keystart occupies an essential place in the housing continuum here in WA by creating opportunities for those currently living in public housing, affordable community rentals and private rentals – to graduate to affordable home ownership through accessible financing models and shared equity models.
Our customer could be a single working mother in her 30s buying a subdivided block in Marangaroo and building a new home, a young couple looking to buy land and build their first home together – or a First Nations couple in their late 50s buying an established house in their hometown of Broome, after raising five children in rentals around the Kimberley.
How are we able to support such a diverse customer base? Part of what makes Keystart unique is the application of income limits and property value caps. These parameters for eligibility ensure products are made available to singles, couples and families who are least likely to meet the deposit requirements of a traditional lender.
Saving for a deposit is the single largest hurdle sitting between Australians and home ownership.
It is taking the average first home buyer about 12 years to save for a deposit, and this isn’t just a result of housing prices. Modelling shows that even if house prices dropped by 20%, the average Australian would still be saving for nine years to afford the deposit on an average home.
So, by lowering this barrier to entry – a 2% deposit instead of 20% - Keystart facilitates a quicker entry into the housing market so Western Australians can start building equity instead of saving for their deposit and paying rent.
Could a product like Keystart benefit more Western Australians if the eligibility criteria were broadened? Absolutely. The influx of applications we saw from a modest increase in our income limits two years ago demonstrated the demand out there, which spurred us to commission CoreLogic research in 2021 to understand just how significant the market size could be in WA for Keystart or like products. Safe to say, there is room for Keystart to grow.
But the essential role we hold at the moment in the housing continuum requires us to prioritise our resources to provide access to affordable housing to those who need it most.
To learn more, visit the Keystart website: keystart.com.au
