Property industry lobby groups and community housing providers alike have welcomed commitments by the Australian Labor Party to boost home ownership and housing supply if it wins office.
At its election platform launch in Western Australia last week, Opposition Labor Leader Anthony Albanese announced that an elected Labor Government would:
- Establish a Help to Buy scheme through which Labor would provide equity contributions of up to 40 percent of the purchase price of a new home and 30 percent of an existing home.
- Establish a National Housing Supply and Affordability Council through which the Commonwealth would take a lead role in boosting housing supply and affordability along with development of a national plan for housing affordability and supply.
The Help to Buy scheme will be available to around 10,000 applicants each year.
To be eligible, households will need a taxable income of less than $90,000 for an individual or less than $120,000 for a couple.
They will also need to have a deposit of 2 per cent and qualify for a standard home loan with a participating lender to finance the remainder of the purchase.
The scheme will enable households to obtain mortgages with as little as two percent deposit.
It will also enable them to have a reduced loan balance and thus to save money on interest and repayments (see table)
Participating buyers will make further savings as they will not need to pay banks’ mortgage insurance which is typically charged on loans of less than 20 percent.
This could result in further savings of up to $30,000, Labor claims.
Participating home buyers will not need to pay rent on the stake owned by the Commonwealth. However, the Commonwealth will recover its equity along with its share of any capital gain when the house is sold.
Meanwhile, the new National Housing Supply and Affordability Council will play a leadership role in increasing housing supply and affordability and will be advised by experts including from the finance, economics, urban development, residential construction, urban planning and social housing sectors.
Whilst responsibility for land and planning will remain with the states, the Council will work with state and territories to set targets for land supply and make public nationally consistent data on housing supply, demand and affordability.
The Council will also have a key role in developing a plan for housing and homelessness.
Housing industry lobby groups and community housing providers welcomed the announcements.
Housing Industry Association managing director Graham Wolfe says the policies announced will help to address critical needs to make housing supply a national priority, unlock new land supply and support new housing and home ownership.
“Today’s announcements by the Australian Labor Party recognise that Home Ownership Matters for so many Australians,” he said.
Housing sector providers say the initiatives will help to address challenges with both home ownership and rental affordability.
“We know that shared equity purchase initiatives to facilitate lower income households into home ownership work,” said Emma Greenhalgh, Chief Executive Officer of National Shelter.
“The West Australian government has been successfully running just such a scheme for over a decade. A welcome aspect of this approach is its potential attractiveness for people looking to re-enter home ownership as well as for potential first home buyers. This is critical, particularly for older women, facing housing challenges following a family separation when there had been joint ownership’.
“But we know that cost of living pressures has been hitting renters particularly hard. Just in the past week we have seen yet another report highlighting just how tough renting is for many Australians. Anglicare’s nationwide survey of nearly 46,000 homes advertised for rent found the grand total of 720 (less than 2%) that were affordable to a single person on the minimum wage. So, the ALP commitment to develop a National Housing and Homelessness Plan provides a real opportunity to build our way out of this crisis.
‘National Shelter and CHIA have been calling for a national housing strategy for years. It needs to bring together the interconnected elements that make up the housing system to design one that responds to the housing needs of all Australians’.
Wendy Hayhurst, Chief Executive Officer of Community Housing Industry Association (CHIA), agrees.
“The plan, the proposed supply and affordability council and the national housing agency – Housing Australia – aren’t made for a media sound bite. But together they provide the necessary ingredients to move us towards solving housing unaffordability – good quality information, a forum to bring partners together, and all under national leadership” Hayhurst said.
“There is a lot to do, we know that social housing has reduced to less than one in twenty homes across Australia. That’s because public and community housing has grown by only 4% over the past 25 years while our population has increased by 30%. Only 1-2% of housing built each year is social and affordable housing – far short of the 16% we managed in 1950s and 1960s. Without a long-term national strategy, we’re going to keep going backwards.”
But the policy was rejected by Prime Minister Scott Morrison.
“Labor has a plan where they want the government to own your home,” Morrison said while campaigning in the marginal seat of Corangamite in Victoria, as reported in Sky News.
“It’s not only that, you are last in line when it comes to your home. The bank has the first call over it. The Government has the second call over it, and you come last when it comes to your own home.
“When you design these policies you need to understand the housing market and you need to understand the economy, and you need to understand the banking and financial system.”