Election dialog on the housing crisis

HELP TO BUY TO HELP FIRST HOME BUYERS, AMONGST OTHERS

Called “Help to Buy”, Labor’s policy promises to assist 10,000 buyers a year by covering 30 to 40 per cent of the cost of a property. Timed just days before the Reserve Bank raised interest rates for the first time since November 2010, and just after the inflation rate hit its highest point since the introduction of the GST, the policy is aimed firmly at low and middle income earners.

The scheme would not be restricted to first home buyers, instead it would be available to anyone who doesn’t currently own any other land or property, either in Australia or overseas.

Modelled on programs already in place in the US and the UK, the plan is a “shared-equity” scheme, whereby a Labor government would purchase up to 40 per cent of the property with the buyer. This percentage could be bought back by the owner over time (or they could opt to leave the shared ownership structure in place), but initially means a smaller deposit, and a smaller mortgage and repayments for the new buyer.

In order to qualify, buyers must:

• Intend to live in the property as their principal place of residence
• Earn $90,000 or less gross annual income per annum as an individual, or $120,000 or less per annum for couples
• Have saved a minimum two per cent deposit
• Can finance the remainder of the purchase through a standard home loan

In addition, the buyer will need to pay for associated purchase costs such as stamp duty, legal and bank fees, and ongoing property costs such as rates and strata fees.

The program is planned to deliver income for the commonwealth over time, as the government recovers equity and their share of the capital gain upon sale.

FEDERAL FINANCE MINISTER SIMON BIRMINGHAM'S INITIAL RESPONSE

Following on from Labor’s announcement, Federal Finance Minister Simon Birmingham promised to expand the existing Home Guarantee Scheme (also known as the First Home Loan Deposit Scheme).

The current scheme allows first home buyers with a deposit as low as five percent to qualify for a home loan (two per cent for single parents), with the government guaranteeing the remainder. This negates the need for Lenders Mortgage Insurance fees, which can add as much as $30,000 on a $600,000 mortgage.

And so in response to Labor’s announcement, the Coalition has promised to significantly increase the number of places in the existing scheme from 10,000 to 35,000 per year, reserving 5,000 places for single parents. In addition, they will boost the highest purchase price the scheme can be used for; for example, raising it from $800,000 to $900,000 in Sydney, and from $700,000 to $800,000 in Melbourne.

UPPING THE STAKES WITH THE SUPER HOME BUYER SCHEME

And the stakes were raised again when Prime Minister Scott Morrison announced the Coalition’s Super Home Buyer scheme.

“A re-elected Coalition government will allow first home buyers to invest a responsible portion of their own superannuation savings into their first home," Mr Morrison said.

Applying to both new and existing homes, first home buyers would be able to use up to 40 per cent of their superannuation (or up to $50,000) to put towards buying a home, with the amount invested returned to superannuation, along with any capital gains, upon sale of the property. While there are no age, property or income thresholds, the buyer would need to live in the home for a minimum of 12 months.

HOW DO THE GREENS STACK UP?

At the 2019 federal election, the Greens were the third largest Australian political party by vote and the fifth largest by elected representation. Adam Bandt, Leader of The Greens, has stated that while he wasn’t satisfied with Labor's housing proposal, his party would prefer to work with Labor rather than a Coalition government.

The Greens will push to establish a Federal Housing Trust, aimed at building one million new homes, including public and community homes, shared ownership homes and universal-access rentals. To be built over 20 years, their ambitious aim is to clear public housing waiting lists, end homelessness and make housing more affordable.

According to their website, they propose to fund this via a new “billionaires tax”, a “corporate super-profits tax”, by “ax[ing] billions of dollars in handouts to the coal, oil and gas giants” and “scrapping handouts to property developers and speculators.” In a blow to investors The Greens also say they’d “scrap taxpayer handouts” for people who own two or more investment properties.

WHAT ABOUT CLIVE PALMER AND THE UNITED AUSTRALIA PARTY?

At the other end of the political spectrum, the United Australia Party (UAP) failed to win any seats at the last election, but is putting forward candidates in most House of Representative seats and the Senate.

Party Chairman Clive Palmer has raised home ownership as part of the UAP’s bid to grow parliamentary representation, saying that “the housing crisis” is “an emergency that we face in this country like any other in times of war, hardship and the depression.” He has promised voters that “the United Australia Party will use the power of the Constitution to put a cap on the bank home lending rate at a maximum of three per cent for the next five years.”