With property prices soaring, the traditional Australian dream of owning your own home has become increasingly out of reach for thousands of South Australians.
Home ownership is even more difficult for older women and single parent families, with the disparity in property ownership between men and women playing a significant role in the gender wealth gap.
According to Eliza Owen, Head of Residential Research at Corelogic, property ownership remains “a powerful means of wealth accumulation and a pillar of retirement. Outright home ownership reduces costs at a time when individuals generally have lower income and can reduce the incidence of poverty in retirement.”
HomeStart, a State Government organisation established in 1989, exists to help more South Australians overcome the barriers to home ownership.
Andrew Mills, HomeStart’s CEO, says the organisation’s purpose is to “make home ownership a reality for more people in more ways.”
“Helping people to buy their own home can transform their situation, provide people with greater confidence and self-esteem, and this has a long-term positive impact for them and their family,” Andrew explains. “It also benefits society and the wider community. We’re really lucky to be able to do what we do.”
The Wyatt Trust has partnered with HomeStart since 2008 to provide Wyatt Loans of up to $10,000 for applicants with a net annual household income of less than $42,500.
The Wyatt Loan offers an interest and repayment free period of five years which can make an enormous difference for low-income households struggling to save a deposit or cover the fees and associated costs of purchasing a home.
In this Q&A, Andrew Mills reflects on the challenges and opportunities for increased homeownership, the impact of the pandemic on property prices, and how the partnership with Wyatt is making a difference to the community.
Can you tell us how HomeStart works and how it helps more people become homeowners?
AM: We offer a range of innovative home loans which are designed to help people buy a home sooner. With property prices rising rapidly, a wider section of the community is finding home ownership less affordable than ever.
Many of our customers are unable to get a loan from a traditional bank or lender due to lack of deposit or earning a lower income. Without HomeStart, they would potentially struggle to own their own home, and enjoy the security, stability, and other benefits available. Our customers are very successful at repaying their loans, they just need a helping hand to get started.
We’re particularly proud to have supported hundreds of older women and single-parent families into their own homes, when many of these women and families on lower incomes and struggling to save for a deposit.
We’ve found over the past 10 years that our first-home buyers have been getting older which means it’s even more important that HomeStart is here to help.
In your experience, what are the biggest barriers to home ownership?
The costs associated with buying your own home, including the deposit and stamp duty costs, remain the biggest barriers to home ownership. Saving for the deposit when house prices continue to rise means that owning your own home can feel like it’s constantly out of reach.
HomeStart helps to level the playing field with low-deposit loans and can reduce upfront costs with fee assistance loans (such as the Wyatt Loan) and no Lenders Mortgage Insurance.
We also have loans that help lift the buying power of lower income customers without increasing their monthly repayments, using either a subsidised interest rate or taking advantage of shared equity arrangements, and this has become more important with house prices going up so quickly.
HomeStart also recognises that buying a home is a complex and daunting task for anyone, which is why we are working to deliver more knowledge, training, seminars, and other support to help people still in the early stages of thinking about buying.
Are there any stories of single parent families or older women you’ve helped that you may be able to share?
Yes. We helped a single female in her mid-20’s with two children who was on a net yearly income of $45,600. She wanted to buy a property in Mount Gambier for $220,000 as a first home buyer with fees of $15,466. She qualified for a Wyatt Loan of $10,000 and was able to reduce her upfront fees to $5,466 plus her 3% deposit. The Wyatt Loan helped her and her two children to move out of private rental and into their own home.
The second was a single female in her mid-50s with no children on a net yearly income of $21,276. She wanted to buy a property in Munno Para West for $230,000 which had fees of $13,390. She qualified for a Wyatt Loan of $10,000 and was able to reduce her upfront fees to $3,390 plus the 5% deposit. With the Wyatt Loan, she was able to move out of boarding and into home ownership.
What has The Wyatt Trust’s partnership meant to Homestart since starting in 2008 and how is it making a difference?
The Wyatt Trust and HomeStart have a shared belief in helping to address inequality and create opportunity. We’re extremely proud of our long-term relationship with The Wyatt Trust.
The partnership with The Wyatt Trust and the introduction of the Wyatt Loan has made a significant difference to the community. In my view, the Wyatt Loan is a wonderful example of how relatively small amounts of funding to sustainably help a large number of people, over a long period of time.
House prices increased substantially during the pandemic – how has that impacted your work and what are you seeing in terms of the consequent financial pressures?
Rising house prices have made it increasingly difficult for many South Australians to afford their own home, but HomeStart has a proud record of rising to a challenge, and we’ve been able to help people into their own home over many years, and in many different housing markets.
More recently, we’ve renewed our focus on helping to educate our customers and supporting them at every stage of their home buyer journey. This starts while they’re saving for a deposit, managing their finances and working with our customers to explore what they’re able to afford.
As a result, during the pandemic and despite rising house prices, we managed to help more South Australians into their own home than ever before.