A new scheme will help a small number of Illawarra first home buyers enter the property market sooner, but will likely push prices up, an academic says.
Last week, the federal government introduced legislation to implement the First Home Loan Deposit Scheme.
The scheme aims to help first home buyers, by providing a guarantee that will allow eligible first home buyers on low and middle incomes to purchase a home with a deposit of as little as five per cent. The scheme will support 10,000 first home buyers each financial year nationally.
Alex Frino, Professor of Economics at the University of Wollongong said that fundamentally he didn't think the scheme will make much of a difference.
"I think the numbers (it will cater for) are small - we're talking about 10,000 first home buyers each financial year.
"That's quite a small number when you compare it to the number of dwellings and the number of purchases every year.
"The Illawarra has about 120,000 dwellings in it, and that's about 1.35 per cent of all dwellings in Australia.
"That means that 130 people or families will be helped to acquire dwellings in the Illawarra, if we get our fair share of what's on offer.
"Or about $16 million, which is not a great amount of money... It's better than nothing, but the numbers are small."
Prof Frino said the scheme also didn't tackle the fundamental problem - a shortage of housing supply.
"If you don't increase the number of the supply of houses out there, but you increase the number of buyers, all you're going to do is push up the price of dwellings," he told the Mercury.
"The problem is not as much one of funding, as it is a lack of supply of housing stock.
"Anything that really just helps people get more money to bid for houses doesn't solve the fundamental problem. We need to increase housing stock."
The government says the scheme recognises that saving a deposit has become a more significant barrier to entering the housing market than the ability to service a home loan.
Applicants will be subject to eligibility criteria, including having taxable incomes up to $125,000 per annum for singles and up to $200,000 per annum for couples.
The scheme will apply to owner-occupied loans on a principal and interest basis, and will be subject to regional price caps.