The Victorian government is urging Victorians who are struggling to save enough to buy their own home, to register for HomesVic, a shared equity scheme that will see the government provide up to 25 per cent of the initial purchase price.

REIV president Richard Simpson told SCHWARTZWILLIAMS, “It is likely that the HomesVic Scheme will assist some first-home buyers struggling to get into the market."

Applications will officially open in February 2018, and the pilot scheme will begin in early in the year. The government has allocated $50 million over two years for the new program.

Up to 400 first home buyers who meet the eligibility criteria will be able to apply for the scheme.

To express your interest in HomesVic, and to find out more, click here.

Priority will be given to buyers purchasing homes in selected areas in Melbourne and in commuter towns and regional centres where there is a high demand for housing, and good access to employment, public transport and other services. The specific areas will be announced early next year, prior to applications opening.

Applicants will require incomes of up to $75,000 for singles, or up to $95,000 for couples or families, and will need to come up with a 5 per cent deposit.

When the properties are sold, the buyers will pay the government proportional interest, which will be reinvested back into the scheme.

Simpson explained that "a similar initiative has already been successful in the UK, however, it’s unclear how the scheme will work in practice here, particularly in relation to repaying the deposit and the distribution of any capital gains on the eventual sale.”

Click here to view details of the UK's similar initiative.

The UK scheme only applies to leasehold properties, said Simpson.

HomesVic is part of the Victorian government’s Homes for Victorians package which was announced earlier this year, which also includes stamp duty cuts for first-home buyers.

Stamp duty has been abolished for first-home buyers on properties valued at less than $600,000, and has been reduced for houses between $600,000 and $750,000. More than three thousand Victorians have so far benefitted from these changes.

Simpson urged first-home buyers to be careful not to overextend themselves financially.  “While the scheme is likely to genuinely assist first homebuyers buyers at the lower end of the market, it may encourage buyers to stretch themselves beyond what they can afford," he said.

Simpson said the Victorian state government's stamp duty concessions will do more to help first-home buyers, but it is still a positive that the government is helping that segment of the market.

“Given Australia’s housing market is the largest store of the nation’s wealth, the REIV considers it crucial that the government continues to support first homebuyers in entering the market. Initially, the HomesVic scheme will only apply to 400 properties, the removal of stamp duty is of greater benefit to a larger number of first homebuyers," he said.

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Simpson urged the government to release more land onto the market to help further alleviate affordability pressures in the city, where the population is growing strongly.

“Faster release of available land within city limits would assist in improving housing affordability in Melbourne, particularly in the city’s outer suburbs," said Simpson.

“There is still a substantial amount of available land within the city limits, however this requires the Government to rezone it for residential development. Faster release of this land would increase supply, which is the main issue impacting on housing affordability at present.”

To express your interest in HomesVic, and to find out more, click here.

Read more about Melbourne real estate:

APRA measures push investors out, let first-home buyers in

Affordability is improving, and first-home buyers are back in the market

First-home buyers are back in the market