Commonwealth Bank of Australia has agreed to recognise low-deposit pre-sales secured through a third-party app, allowing developers to get on and build the projects the bank is funding.
CommBank’s collaboration partner Coposit is a property finance platform that allows homebuyers to sign up to an off-the-plan property for a deposit of just $10,000.
Homebuyers then continue to make interest-free weekly payments via the app to save their full 10% deposit while their home is being built - a sort of buy now, pay later scheme for housing.
It also effectively locks in the price they’ll pay for the home rather than having to wait until they save their deposit the traditional way, during which time prices can go up.
While homes are being constructed, Coposit says it can help buyers get pre-qualified for traditional home loans once their properties are completed.
These can be with any lender, not necessarily CommBank which is agreeing to fund developers under the scheme.
What’s in it for CommBank?
CBA Group Executive Business Banking Mike Vacy-Lyle said the scheme is part of the bank’s ongoing commitment to support the construction sector and back innovative solutions to tackle Australia’s housing shortage.
“Housing affordability and undersupply are some of the most pressing issues nationally, requiring a multifaceted approach,” he said.
“Initiatives like this could make a real difference, particularly for first home buyers, by allowing them to secure the purchase of their first home will continuing to save for the initial deposit until the property is built.”
CommBank launched the scheme on Wednesday covering 65 off-the-plan projects signed with Coposit in New South Wales, Queensland, and Victoria with plans to expand to Western Australian in early 2025.
What’s in it for Coposit?
While Coposit doesn’t charge interest to home buyers making ongoing deposit payments, it makes its money through charging developers a listing fee and takes a cut on any sales made through its platform.
This effectively allows developers access to off-the-plan buyers who may not have the traditional 10% deposit required.
Banks and other lenders funding larger housing projects like to see significant pre-sales with minimum 10% deposits before approving finance for developments to proceed.
In recent years, developers have struggled to get larger, more affordable housing projects off the ground with lenders wary of higher land prices and construction costs.
It’s seen the market concentrate on smaller, upmarket projects, usually with bigger profit margins.
It’s also meant some first home buyers’ deposits have been tied up in projects that have failed to get off the ground, effectively keeping them out of the market as home prices have continued to climb.
‘Levels the playing field’: Coposit CEO
Coposit CEO Chris Ferris said CBA should be commended for getting behind the scheme.
“I think that’s been really pivotal for CBA, not only on the housing supply side of things, but as Australia’s largest bank, they’ve really expressed an interest to ensure there there’s different and innovative ways for people to really get into the market and break [into] home ownership,” Mr Ferris said.
He said the scheme is a way for Australian homeowners to get into the market without developments turning to international investors, as has happened in the past.
“It levels the playing field for everyone and everyone has that same ability to access property,” he said.
“It’s definitely going to open up the market to an additional cohort of buyers that may have been locked out before and have those moving goalposts which is a huge problem in the market.”
The fine print
If projects get delayed while home buyers are still making payments towards their deposit, Coposit said the money is held in a trust pending settlement of the property.
The projects that have signed with Coposit’s program include projects from developers Lewis Land, Mulpha, and Hirsch & Faigen.
The full list of projects is available via Coposit’s website.
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Image of Yves project on the Gold Coast, Queensland, supplied by Commonwealth Bank of Australia.
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