Going halves: are shared equity schemes the answer in Australia’s pricey property market?

Nonprofit schemes aim to help first home buyers who cannot rely on ‘the bank of mum and dad’ – but they have their limits

Sean and Beth McElhenny’s family of four recently bought a three-bedroom home in Sydney’s north – something they didn’t think they would be able to afford for more than a decade.

And instead of paying $6,800 a month in mortgage repayments the couple, who work as teachers, only pay half that amount.

The catch is, technically they only own half the house – the other half is owned by a nonprofit that they can buy out at any time.

The home was bought as part of a shared equity scheme, where the government or nonprofit buys a portion of a home and an individual or couple owns the rest.

Sean and Beth McElhenny at home with their two children.
Sean and Beth McElhenny at home with their two children. Photograph: Blake Sharp-Wiggins/The Guardian

Such schemes are growing in popularity across Australia, and can provide a leg up into the housing market for people who don’t have the privilege of parental wealth. But are they a solution to Australia’s housing crisis?

“It’s institutionalising the bank of mum and dad for people that don’t have the bank of mum and dad,” says Tim Buskens, chief executive of Hope Housing, which relies on investors for its program and through which McElhenny bought his home.

The organisation, like other shared equity schemes, allows people to buy into a home with a smaller deposit and chips in a percentage of the price so the buyer only has to make mortgage repayments on their slice.

Primarily via word of mouth, Hope Housing has so far supported six families to buy a home since it launched in August, Buskin says. It has a further 12 approved, and 85 on the waiting list, and is targeted at key workers such as nurses, teachers and cleaners, who don’t earn a “Sydney wage” and can’t afford to live in their communities.

Joey Moloney, an economics expert at the Grattan Institute, agrees such schemes can help people who don’t have access to parental wealth.

According to a recent survey by the thinktank Per Capita, two-thirds of Australians wanting to buy a home believe it will only be possible via an inheritance from their parents.

But, he says, it is just one tool “in the housing toolbox” that should be limited, otherwise it risks driving up house prices even further.

Still, he says it should be a crucial part of the federal government’s housing agenda. Labor promised a scheme in the lead-up to the last election, but it is yet to materialise.

Moloney says the scheme should be targeted at singles earning up to $60,000 and couples earning up to $90,000 who would otherwise be locked out of the housing market. He says it would be best directed towards people stuck renting who wouldn’t otherwise be able to pay off a mortgage before they retire, or people looking to regain home ownership after a divorce.

“The guiding light here is that renting in retirement is the No 1 risk factor for poverty,” Moloney says.

But he says anyone eligible for the scheme would benefit. Sean McElhenny, 35, had been living in a two-bedroom apartment with his family of four. McElhenny says it probably would have been too late to buy by the time they could afford the three-bedroom house they need.

No plans to sell: the McElhenny family home, which they own half of.
No plans to sell: the McElhenny family home, which they bought with help from a nonprofit group. Photograph: Blake Sharp-Wiggins/The Guardian

“In 10 to 15 years, the kids would have been looking at leaving home so we wouldn’t even need it then,” he says.

He says he is not bothered by the fact he and Beth would only earn 50% of the profit if the house were to be sold, given they view it as a stable family home for the next 20 years rather a moneymaker.

“We actually have a home now where our kids have their own bedrooms and actually have space to have their friends over,” he says. “It means, if we want, our family of four can eventually become a family of five.”

The independent economist Saul Eslake agrees the program can help people locked out of the housing market, as shown by a scheme in Western Australia which began in 2007 and has since helped 8,300 people buy a home. Similar schemes have more recently been introduced by state governments in Victoria, South Australia and Tasmania, and are being trialled in New South Wales.

But Eslake says it is a Band-Aid that is favourable among governments, given they can walk the thin line between helping people locked out of the market, while not devaluing the homes of existing property owners.

“It doesn’t represent an overall solution to deeper problems in the housing market,” he says.


Jordyn Beazley

The GuardianTramp

Related Content

Article image
Australia’s regional property boom slows but housing stress still a major concern
Beach and country lifestyle areas show market weakness after record-breaking rises during the pandemic

Caitlin Cassidy

17, Aug, 2022 @5:00 AM

Article image
What $1m buys you: house hunting in today’s uncertain property market
Australian home prices are easing but mostly remain above pre-pandemic levels. Here’s where to find affordability and space

Caitlin Cassidy

01, Oct, 2022 @7:00 PM

Article image
‘Web of lies’: how scammers are taking advantage of Australia’s tight rental market
The ACCC received more than 658 reports about rental and accommodation scams last year, with a reported loss of $544,846

Cait Kelly

03, Mar, 2023 @11:00 PM

Article image
Buy now, pay later schemes for Australian renters ‘prey on vulnerable’, financial counsellors warn
BNPL-style products with a 5% fee leave the average Sydney renter paying $25.75 more a week

Stephanie Convery

03, Feb, 2022 @4:30 PM

Article image
‘It made us nervous’: rising interest rates and falling property prices squeeze household budgets
Successive rate hikes to cost average homeowner an extra $610 a month in mortgage repayments compared to what they were paying in April

Cait Kelly

02, Aug, 2022 @6:56 AM

Article image
A quarter of Australia’s property investments held by 1% of taxpayers, data reveals
Exclusive: Taxation office figures also show a clear majority of those investors are over the age of 50

Mostafa Rachwani and Antoun Issa

03, Jun, 2023 @8:00 PM

Article image
Australia records strongest annual growth in home prices
Residential property prices surged 23.7% in 2021, according to the latest ABS report

Cait Kelly

15, Mar, 2022 @2:29 AM

Article image
Why the price of a Big Mac tells us the Australian dollar is undervalued – and most economists agree
Many analysts think the Aussie dollar should be 20% stronger. If so, those on variable mortgage rates might have cause to celebrate – perhaps with an overseas holiday

Peter Hannam Economics correspondent

04, Feb, 2022 @7:00 PM

Article image
Median home price could fall below $1m in Sydney and about $700,000 in Melbourne next year
Nationally there could be an 8% drop in prices, modelling by RateCity using Commonwealth Bank housing forecasts suggests

Tory Shepherd

02, Mar, 2022 @3:17 AM

Article image
Sydney renter hit by 35% hike as housing crisis sparks calls to cap increases
Tenants’ Union says some form of rent control is needed to alleviate pressure during a ‘nasty’ time in the market

Mostafa Rachwani

03, Feb, 2023 @9:06 PM