Housing Minister Clare O’Neil says the expanded 5 per cent home deposit scheme will drastically cut first home buyers’ waiting time to get into the housing market. Photo: Clare O’Neil Facebook.
Labor is touting its opening up of the 5 per cent deposit scheme to all first home buyers as the best thing since sliced bread, but the Coalition and the Greens are condemning the move as potentially disastrous.
The Federal Government has brought the scheme forward by three months to take effect from Wednesday (1 October). It is also removing income price caps, as well as raising property price caps in line with average house prices.
Under the program, the government acts as guarantor for the remaining 15 per cent of a 20 per cent housing deposit, reducing upfront costs for purchasers.
Treasury’s modelling suggests the expanded scheme will marginally lift house values by just 0.5 per cent over six years.
Housing Minister Clare O’Neil says that a projected modest rise is no reason not to expand the scheme now.
“I won’t look a generation of young people in the eye and tell them they have to wait until we address the supply issues before they get support,” the Minister said.
“People around the country need help right now, that is what they are getting from our government today. What we expect is that over the year, we’ll have tens of thousands of additional young people who are getting that extraordinary opportunity to own a home of their own.
“What the government’s doing today will slash the time it takes people to save for a home deposit.”
All first-home buyers around the country will be eligible to enter the market with a 5 per cent deposit and the government’s backing.
The government predicts that the time required to save for a deposit could be reduced from 11 years to just three or four years due to the scheme.
Fresh back in Australia from his extended overseas trip, Anthony Albanese said the scheme will have minimal impact on property price increases.
“There will be a slight increase in prices, but already 185,000 Australians have benefited from this scheme with minimal impact on prices,” the Prime Minister said.
“Treasury did modelling. They suggest a very small increase, but what it will do is allow more young people to get into home ownership.
“And this is just one of the measures. We are dealing with supply. We have that incentive for state and territory governments as well, a $3 billion incentive for them to deliver more homes so that we reach our target of 1.2 million homes.”
Greens housing spokesperson Barbara Pocock said while the policy looks good on paper, the scheme’s expansion is actually a “sick joke” that will inflate prices and “turbocharge” the nation’s housing crisis.
“In the midst of a national housing crisis, this scheme will add billions of dollars to property prices. How is this a solution?” she said.
“Taking out a 95 per cent mortgage when property prices are eight times the average household income doesn’t create stability, it sets first-buyers up for financial hardship, while the banks take the profits.
“If Labor’s goal is to make housing even more out of reach for everyday Aussies, it’s certainly succeeded.”
The Greens have long campaigned for the government to scrap the capital gains tax discount and end negative gearing instead.
The Federal Opposition isn’t a fan of the expansion of the 5 per cent deposit scheme either, with shadow housing minister Andrew Bragg saying it will be exploited by the children of billionaires.
Senator Bragg stated that removing income caps would result in taxpayers carrying a $60 billion contingent liability.
He also said there was no question that the scheme’s expansion would increase demand and lift house prices.
Senator Bragg added that more homes needed to be built as a matter of urgency.
“Instead of fixing the housing crisis by boosting supply, Labor is letting the Australian dream die,” he said.
“It is cruel, mean and unfair. “Australia needs to build its way out. Yet under Labor, we are seeing record-low development per capita.
“For first home buyers, things will only get worse.”
Original Article published by Chris Johnson on Region Canberra.
