Developer builder Eastern Pacific has pledged to help first home buyers
purchase property with as little as $10,000 in a bid to help them stay in the market as prices
begin to climb.
Eastern Pacific Director Chris Abouhamad says the obstacle for first home buyers is always
the initial investment, particularly as prices rise and the gap between savings and the
required deposit amount grows.
“We are working with AffordAssist to enable first home buyers to purchase off the plan with
as little as $10,000. This is in comparison to the usual minimum $55-65k needed to meet a
10% deposit requirement.”
Although other programs exist to help, such as rent to buy and equity share models, as well
as the grants and loan schemes offered by the government, AffordAssist solves the deposit
problem without increasing the risk to the lender.
“The purchaser may not have the balance today but they have the servicing capacity,” says
AffordAssist founder Anthony Aoun. “We developed a proprietary agreement called a
deferred deposit agreement. Together with the buyer’s cash deposit of $10,000 or more, it
becomes the deposit needed for the purchase of the property.”
The agreement consists of a variant amount of what the buyer does not have in cash and
what the bank will not approve as a loan. The shortfall is paid back to the developer over a
period of time, without interest.
Figures show first home buyers have had greater opportunity over the past 12 months with
HIA reporting an increase in lending to first home buyers of 6.2 per cent in the month of
December 2019, or 3.6 per cent for the quarter – the highest number of first home buyer
loans since December 2009.
This activity has also been assisted by the Federal First Home Loan Deposit Scheme which
HIA reports has so far helped 3,055 first home buyers into the market, with 76% of
purchasers aged between 18 and 34.
However, as investors and owner-occupiers return to the rising market and first home buyers
struggle with access to finance, Eastern Pacific and AffordAssist say that government
schemes and grants are not enough to keep the market open.
Of the 84 apartments available at Eastern Pacific’s Mays Hill project near Parramatta, 10–15
have been set aside for first home buyers, with 8 purchased so far.
Harvey and Tammy Gustave recently purchased a two-bed unit at Mays Hill with the help of
AffordAssist – a move they say effectively cut their saving time in half.
“We see our first home as an insurance premium for the future, we can use it as a stepping
stone to build our property portfolio for the future,” says Harvey.
Chris says the industry has a responsibility to ensure there is never a market where first
home buyers simply cannot get a foothold.
“If first home buyers are squeezed out, it will create long-term negative effects on the asset
base of the buyer and their family.
“First home buyers are the future of this country. There are many non-viable short-term
solutions, and it may take years before all levels of government, banks, councils and
developers agree on a consistent framework – we’re short-circuiting that and getting first
home buyers into homes, today.”