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Australians set for home deposit scheme

HOW THE HOME DEPOSIT SCHEME WILL WORK

* Some Australians buying their first home will only need to save up a five per cent deposit, with the National Housing Finance and Investment Corporation guaranteeing the difference between that and a standard deposit of say 20 per cent.

* Approved first home-buyers would also be saved from paying about $10,000 for lenders mortgage insurance.

* The NHFIC will have $500 million to work with and be given $25 million to establish the scheme and research the housing market.

* The scheme is expected to cut the time it takes people to save for a home - on average at least nine years - by half.

WHO CAN USE THE SCHEME?

* The scheme will benefit people earning up to $125,000, or a couple with $200,000.

* The government estimates about 10,000 people will benefit each year, which would have been one in 11 new home-buyers in 2018.

WHERE DID THE IDEA COME FROM?

* The plan is based on another program already operating in New Zealand. But across the Tasman, first home-buyers must save a deposit of 10 per cent, rather than five per cent, before they are eligible to have their loan underwritten by Housing New Zealand.

WHAT ARE THE RISKS?

* Financial comparison site RateCity has urged Australians to be careful of taking out 30-year home loans with wafer-thin deposits, lest they be left to pay thousands more in interest than they would with a deposit of 20 per cent.

* Prime Minister Scott Morrison says it's "difficult to say" whether house prices will go up under the plan, but is certain they wouldn't go down.

WHAT'S THE ALTERNATIVE UNDER LABOR?

* Labor has agreed to match the scheme, but shadow treasurer Chris Bowen says it would only be effective when matched with broader reforms, such as the opposition's proposed changes to the negative gearing tax break and capital gains tax.

* The coalition says Labor's tax changes would drive house prices down and rents up, a claim the opposition rejects, stressing Treasury modelling shows it would only have a modest impact.

* The government has also highlighted the Labor's plan to scrap another scheme that helps people save for their first home by withdrawing voluntary contributions to their superannuation

WHAT'S GOING ON WITH HOUSE PRICES?

* House prices have declined nationally by 7.9 per cent since peaking in September 2017, according to property data firm CoreLogic.

* But the firm's latest report shows the rate of decline has moderated, suggesting housing conditions may be through the worst of the downturn.

* Among contributors to the fall in prices was the Australian Prudential Regulation Authority significantly ramping up its oversight of mortgage lending between 2014 and 2018.

© AAP 2019