First home buyers will get government support with their 20 per cent house deposit whoever wins the federal election on May 18.

Prime Minister Scott Morrison announced a new scheme at the Liberal election campaign launch in Melbourne on Sunday that will mean a home buyer would only have to save for a five per cent deposit.

Labor was quick to steal his thunder, saying it will match the plan.

Mr Morrison said a similar scheme had been successfully running in New Zealand for a number of years.

Under the plan, the National Housing Finance and Investment Corporation – which Mr Morrison established when he was treasurer – would guarantee the difference between five per cent of the purchase price and the 20 per cent deposit.

“This will make a big difference,” Mr Morrison told the party faithful on Sunday.

“Cutting the time taken to save for a deposit by at least half and more.”

Shadow treasurer Chris Bowen said Labor would match this commitment.

“After six years of failure, and six days before an election, the Liberals are desperately trying to tell young Australians they understand their struggles to buy their first home,” Mr Bowen said in a statement.

He said first home buyers knew the Liberals were out of touch and were only for the top end of town.

“We back genuine support for first home buyers – that’s why we are also reforming negative gearing for future purchases, so young Australians don’t have to keeping losing out to wealthy property speculators,” he said.

The Property Council said the deposit plan was a “smart proposal” and will provide some confidence for the housing construction sector.

“It will deliver some welcome assistance for aspiring first home buyers who have been confronted by the ever-increasing size of the deposit required to buy a home as the market has risen in recent years,” the council’s chief executive Ken Morrison said in a statement.

The prime minister said the plan would allow singles earning less than $125,000 a year and couples earning less than $200,000 a year to get into the housing market for the first time.

“The support would stay in place for the life of the loan,” the prime minister said.

“They’ve got their first leg on the first rung of the ladder.”