Finance
Couple forced to live in caravan buy first home as ‘stars align’ in off-market sale
Natasha Luscri and Luke Miller consider themselves among the lucky ones. The couple recently bought their first home in the northwest suburbs of Melbourne.
It wasn’t something they necessarily expected to be able to do, but some good fortune with an investment in silver bullion and making use of government schemes meant “the stars aligned” to get into the market. Luke used the federal government’s super saver scheme to help build a deposit, and the couple then jumped on the 5 per cent deposit scheme, which they say made all the difference.
“We only started looking because of the government deposit scheme. Basically, we didn’t really think it was possible that we could buy something,” Natasha told Yahoo Finance.
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Last month they settled on their two bedroom unit, which the pair were able to purchase in an off-market sale – something that is becoming increasingly common in the market at the moment.
Rather perfectly, they got it for about $20-30,000 below market rate, Natasha estimated, which meant they were under the $600,000 limit to avoid paying stamp duty under Victoria’s suite of support measures for first home buyers.
“They wanted to sell it quickly. They had no other offers. So we got it for less than what it would have gone for if it had been on market,” Natasha said.
“We didn’t have a lot of cash sitting in an account … I think we just got lucky and made some smart investment decisions which helped.”
It’s a far cry from when the couple couldn’t find a home due to the rental crisis when they were previously living in Adelaide and had to turn to sub-standard options.
“We’ve managed to go from living in a caravan because we were living in Adelaide and we couldn’t find a rental with our dogs … So we’ve gone from living in a caravan, being kind of tertiary homeless essentially because we couldn’t get a rental, to now having been able to purchase our first home,” Natasha explained.
Rate rises beginning to bite for new homeowners
Natasha, 34, and Luke, 45, are among more than 300,000 Australians who have used the 5 per cent deposit scheme to get into the housing market with a much smaller than usual deposit, according to data from Housing Australia at the end of March. However that’s dating back to 2020 when the program first launched, before it was rebranded and significantly expanded in October last year to scrap income or placement caps, along with allowing for higher property price caps.
Those who use the scheme, don’t have to pay for lender’s mortgage insurance (LMI), which essentially gets picked up by the backing of the Australian taxpayer.
But as the housing market cools, and prices in Melbourne and Sydney start to reverse, housing economists have warned buyers with a small deposit are a lot more vulnerable, and could quickly find themselves in negative equity.
New borrowers, including those who have used the 5 per cent deposit scheme, are falling behind on payments at a much higher rate this year. In the month of February, 0.78 per cent of new mortgage holders were 30 days in arrears, which is twice as high as the 0.39 per cent of borrowers who purchased their home earlier, according to data from the credit bureau Equifax, which was shared with Yahoo Finance.
“The scheme encourages risky borrowing and bidding. Borrowers are gambling with the taxpayers money,” former RBA economist Peter Tulip remarked online last week.
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But for a vast majority, like Natasha and Luke, they still have room to move. According to Loan Market broker Samuel Power, who helped the couple into their loan, their cautious borrowing approach is a common story.
“The only time we would look to move closer to that top-end borrowing limit is if it is the difference [for a client] between getting in or not, provided there is a strategy in place to be comfortable making repayments into the future,” he told Yahoo Finance.
“A key shift we are noticing is there is a shortage of stock in the price range typically favoured by first-home buyers and investors, which seems to be limiting both groups,” he added.
As Natasha works as an actor with unsteady income, the bank assessed the loan on the basis of Luke’s income, who works as an engineer for a Virgin Australia subsidiary.
“We’ve actually had three cash rate increases since we got our pre-approval, which is frustrating,” Natasha admitted.
“If the rate rises continue, then it’ll be consumption spending in our budget that gets cut.”
Two sides to first home buyer ‘band-aid’
Although she works in the entertainment industry, Natasha studied International Business and Economics at RMIT to get her degree.
She understands there is an inherent conflict at the heart of the policy that she believes made the difference to becoming a homeowner.
“It’s funny, I know economists have been sort of across the board very negative about the 5 per cent deposit scheme in terms of pushing prices up. Having studied economics, I understand that, but at the same time, I’ve benefited,” she said.
“So you know, sometimes a policy can work for you, even though you might think it’s not going to work long-term in the economy.
“So, yeah, it’s complicated … policy tends to be a band-aid, rather than something that’s actually structural change.”
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