Prime Minister Scott Morrison said on Sunday night the price caps on the popular scheme had been raised to $800,000 for Melbourne and regional Victoria and $900,000 in Sydney and regional NSW.
“We’re building a stronger future for Australians by making home ownership easier by making more properties eligible for the scheme,” Morrison said.
The number of places in the scheme was doubled to 50,000 a year in the federal budget in March at a cost of $8.6 million,prompting economists to warn it would drive up the cost of housing.
Economists also cautioned buyers who could only save a five per cent deposit not to extend their finances ahead of rate rises forecast in the second half of this year.
The scheme was initially capped at $700,000 for houses in Melbourne and Victorian regional centres,and $800,000 in Sydney and NSW regional centres. The capital city price cap applies to regional centres with a population over 250,000. A lower price cap applies to the rest of each state.
Analysis by CoreLogic showed under the old price cap of $800,000 only 14.6 per cent of suburbs in greater Sydney would have been eligible in 2021/22. In Melbourne,with the old limit of $700,000,just 20 per cent of locations would have been eligible.