Canberrans looking to take advantage of the Morrison government's first home buyer loan deposit scheme will be restricted to properties below $500,000.
The scheme will allow first home buyers to gain a loan with as little as a 5 per cent deposit from January 1 next year. A panel of lenders will be announced shortly.
To be eligible, home buyers must have earned less than $125,000 in the previous financial year as a single or $200,000 as a couple.
It will also be limited to 10,000 first home buyers per year, on a "first-in, best dressed" basis, Housing Minister Michael Sukkar said.
Labor's Joel Fitzgibbon questioned whether the 10,000 places were enough.
"It sounds pretty modest. I would like to see some guarantee that a fair share of that assistance goes to young people living in regional and rural Australia," Mr Fitzgibbon said.
Labor's housing spokesman Jason Clare said it was unclear if the scheme would help those who needed it most.
"A first come, first served scheme means some people might benefit who aren't as deserving," Mr Clare told RN Breakfast on Monday morning.
There will also be price caps for each capital city and state. In the ACT, properties worth up to $500,000 will be eligible, while the cap will be $700,000 in Sydney and $600,000 in Melbourne.
Mr Sukkar said the caps were determined by looking at the median house prices, and existing schemes to help first home buyers in each jurisdiction. The ACT government abolished stamp duty for first home buyers with a household income of less than $160,000 in July.
He acknowledged they were "modest" but geared towards "low and middle income earners, people trying to get in the market for the first time".
"I think Australians expect that when we are spending tax payers dollars to fund a good scheme like this that it's going towards those who really need it and those importantly who are people that will use it as a stepping into their future," Mr Sukkar said on Sunday.
About a third of properties currently listed for sale in the ACT - around 1000 - are under $500,000, according to the AllHomes website.
Fewer than 70 are detached houses while more than 700 are apartments.
But Independent Property Group's David Shearer said first home buyers would still be able to afford established houses in Belconnen and Tuggeranong under the cap.
Mr Shearer said it would also be possible to buy in greenfield developments for that price, or townhouses or terrace houses. Inner Canberra apartments would also be in reach for those applying for the scheme, Mr Shearer said,
But while Mr Shearer said incentives for first home buyers were "as good as they've ever been", he said the impact of the scheme would be limited.
"It will be interesting to see how many people actually benefit. If there are 10,000 [places in the scheme] across Australia, there'll only probably be 200 in Canberra," Mr Shearer said.
But Grattan Institute researcher Brendan Coates said expanding the 10,000 per year limit would be "counterproductive".
"It would push up prices, benefitting sellers at the expense of first home-buyers, while increasing the risks of inappropriate lending at costs to both households and government," Mr Coates said.
He also said the price caps were "broadly sensible", in that they would limit the scheme to those purchasing "cheaper-than-average homes, which increases the chances that those taking up the scheme wouldn't have bought a home otherwise".
Housing Industry Association ACT executive director Greg Weller said the way the scheme was designed would limit any inflationary impact on house prices.
"I think it would be great if first home buyers did have as broad as choice as possible but in reality this is one scheme helping people get into a first home at a certain price point. In the market there's probably more of a limited choice when it comes to detached homes but there's still a lot of housing product under the cap," Mr Weller said.
Mr Weller also said there was less of an appetite for the quarter-acre block among first home buyers today.
"Whether it's the lower amount of maintenance or people may well be conscious about the cost of travel or work-life balance, a lot of younger people - who dominate the first home buyers' market - some preference or are moving towards higher density living," Mr Weller.
However Mr Weller said schemes like this did little to address the cause of rising house prices.
"One of the big reasons for problems with affordability in the ACT is the price of land. Another big element of the housing affordability problem is a very significant proportion of the price of a house-and-land package or apartment is taxes nd charges going to government, whether that's GST or payroll tax.
Still, Mr Shearer said it was an excellent time to be a first home buyer in the ACT.
"Never look a gift horse in the mouth. I would say very genuinely it's a very good time to be a buyer full stop. You've got the culmination of ultra-low interest rates, historic lows, no one alive today has ever dealt with the cost of money being so low," Mr Shearer said.
"That combined with very solid rental returns, I'm very surprised more people aren't investing, with returns exceeding the cost of money."
