Melbourne’s typical single parent won’t be able to afford a home in metropolitan Melbourne even with the help of the Federal Government’s new Budget measures.
Melbourne Institute figures show a solo mum or dad with one child under 15 earned $54,000 after tax in 2019, while a parent with two children earned a median after tax income of $57,000.
Mortgage Choice has estimated a single parent on such an income could borrow up to $375,000 depending on the number of children they had and which lender they chose
A comparison of the figures against the latest realestate.com.au median sale data for all Victorian suburbs showed even if they only needed a 2 per cent deposit, they could not afford a house in any Melbourne suburb.
Ballarat was the closest regional centre where single parent buyers earning the median income could afford to buy a home under the scheme, with 131 suburbs or towns viable around the state.
But those willing to sacrifice on space could buy a unit in Travancore, Melton West, Melton South, Dandenong, Albion, Kurunjang, Melton and Whittlesea, where median sale values were between $304,500 and $350,000, according to the data.
The Family Home Guarantee announced last weekend and detailed in Tuesday’s Federal Budget enables solo parents with dependent children to buy a home with a deposit of as little as 2 per cent, with the government guaranteeing up to 18 per cent.
The scheme, which has 10,000 places over four years, is designed to make it easier for single parent households with small budgets to break into the property market.
But social housing provider Housing First chief executive Haleh Homaei said the measures didn’t go far enough to help families on smaller budgets.
“This initiative itself is great and I think for a small cohort of people that we deal with, including single parent families, it will be a welcome opportunity to homeownership, but I don’t know how many people will benefit,” Ms Homaei said.
“An unintended consequence of this scheme is it could drive single parents to suburbs outside CBDs and areas with employment, so it adds to the cost of living in other ways, such as transport, people being time poor, (and) pick up and drop off from school.”
Realestate.com.au economist Paul Ryan said the scheme could save families more in the long run by getting them out of rentals and into their own home sooner — but the 10,000 cap on places over four years would impact the scheme’s overall effectiveness in tackling housing affordability.
Mr Ryan warned that with applicants effectively still paying their deposit as they paid their mortgage they would “pay more on a weekly or a fortnightly basis”.
According to the figures, the average single parent income could sustain a mortgage with a 2 per cent deposit in 1008 suburbs across Australia.
— with Nathan Mawby
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