Over the weekend, both the Labor Party and the Coalition introduced extensive policies aimed at addressing Australia’s housing crisis, particularly focusing on supporting young first homebuyers. Each strategy seeks to assist these buyers without relying on parental financial aid, but experts warn against merely making mortgages more accessible as it may not resolve underlying issues.
The Coalition’s “super for housing” initiative proposes allowing Australians to withdraw up to $50,000 from their retirement savings to assist with home deposits. Opposition leader Peter Dutton asserts that this money belongs to individuals, not the government. However, concerns have been raised about the potential adverse effects on long-term financial security. Experts warn such a policy could raise property prices significantly, with estimates suggesting increases of $69,000 in Sydney and even more in other capital cities.
Labor counters with a plan that would permit new homebuyers to secure a property with only a 5% deposit, backed by government guarantees, which would be advantageous for those without familial support. Experts suggest that this approach could help immigrants and those from less affluent backgrounds enter the market. However, there are concerns that this might exacerbate the existing upward pressure on property prices, particularly in times of low supply, potentially undermining the affordability goal.
In light of the existing challenges, both policies emphasise increasing housing supply. The Coalition aims to provide tax relief by allowing first homebuyers of new properties to deduct mortgage interest payments from their income tax, while Labor proposes a $10 billion investment to construct 100,000 homes specifically for first-time buyers. Experts unanimous in their view that merely offering incentives for buyers without a concurrent increase in housing supply will only further inflate property prices.
Overall, both parties are urged to tackle planning and development barriers, as these state-controlled areas significantly impact housing availability. Increased home supply, alongside enhanced focus on affordability, could provide a more effective path to resolving the housing crisis faced by young Australians looking to enter the property market.