First home buyers are making it into the market despite high levels of unaffordability, with about a third using the Australian Government’s Home Guarantee Scheme to purchase.

The scheme helps First Home Buyers who don’t have a 20% deposit to avoid expensive Lenders Mortgage Insurance. The latest State of the Housing System report by the National Housing Supply and Affordability Council says the largest number of first home buyers using the scheme is in the Northern Territory, followed by Queensland, Western Australia, New South Wales, ACT, Tasmania, Victoria and South Australia.

It says affordability is still a major issue, with housing costs rising faster than household income, although it does predict that affordability will stabilise over the next few years and in some cases improve a little. “The price of dwellings is forecast to rise in nominal terms, but at a slightly lower rate than forecast income growth, which implies that there will be a small decline,” it says.