Australia’s housing affordability crisis has taken centre stage in the upcoming federal election as both major parties launch their campaign push.

Both the incumbent Labor Government and the opposition Liberal Party officially launched their election campaign yesterday in Perth and Sydney respectively.

Leaders of both parties made significant announcements regarding housing.

On the Labor side, Prime Minister Anthony Albanese promised that a re-elected Labor Government would:

  • Enable all Australians to buy their first home with a deposit of as little as 5 percent without paying mortgage insurance. This would be achieved by the Federal Government guaranteeing a portion of the loans for first home buyers. The initiative will be subject to caps in property prices.
  • Invest $10 billion in grants and interest free loans to state government developers and industry to construct up to 100,000 new homes that would be for sale exclusively to first home buyers.

The initiative builds on existing Labor initiatives including:

Meanwhile, the Coalition has promised to allow first home buyers to deduct mortgage payments from their taxes for the first five years.

This will be means tested ($175,000 for singles, $250,000 for couples) and will apply to new or newly constructed homes only.

There will be no cap on the overall mortgage size or home price. However, only the first $650,000 of the loan will qualify for deductions.

This builds on previous Coalition promises, which include:

But the Opposition has also pledged to end the $10 billion Housing Australia Future Fund.

The latest data comes amid ongoing challenges in housing affordability.

As at September last year, just 10 percent of Australian homes were affordable to those on median incomes, according to a report published last November by the ANZ and CoreLogic.

This is down from almost 30 percent 20 years earlier in September 2004.

That same report indicates that it now takes 10.6 years for the average household to save for a 20 percent deposit on a median priced home.

This is down up from 8.0 years in September 2004.

(source: ANZ, CoreLogic, November 2024)

(source: ANZ, CoreLogic, November 2024)

 

The Leader for Housing

Speaking at their respective campaign launches both Prime Minister Anthony Albanese and Opposition Leader Peter Dutton focused their pitches on home ownership.

“Labor stands up for Australian values and we are backing the Australian dream,” Albanese said.

“I will be a Prime Minister who restores the dream of home ownership,” Dutton said.

 

Adding to Housing Prices

However, as reported on City News, economist Saul Eslake warns that the measures could simply bid up house prices.

“This is a bad day for aspiring home-buyers,” he said.

Eslake is particularly critical of the Coalition’s proposed saving of about $12,000 with a taxable income of $120,000 under its proposal.

“They will take out bigger mortgages,” he said.

“And so house prices will go up.

“As they always do.”

 

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