Anthony Albanese has promised a Labor government would cut the cost of a mortgage by up to $380,000 for some eligible Australians under its Help to Buy scheme – the details of which were largely applauded across the real estate sector.
The program sees an Albanese Labor government provide eligible home buyers with an equity contribution of up to 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price for an existing home.
Buyers are able to purchase a property that they intend to live in with a deposit of as little as 2 per cent. Participating lenders finance the remainder of the purchase.
During the period of the loan, the home buyer is able to buy an additional stake in the property when they have the means to do so. Before that point, they do not have to pay rent for the portion of the home owned by the government. The government would recover its equity and its share of the capital gain when the house is sold.
All Australian citizens are eligible, provided that they meet the income cap of up to $90,000 for individuals and up to $120,000 for couples and do not currently have a stake in a property. But they can have owned property previously – they need not be first home buyers to apply.
Price caps apply to the maximum value of the home, depending on a buyer’s region. They range from as high as $950,000 for a home in Sydney or NSW’s regional cities to $400,000 in regional Tasmania, regional South Australia, and regional Western Australia.
The full list of price caps is as follows:
NSW capital and regional centres, $950,000
NSW rest of state, $600,000
Vic capital city and regional centres, $850,000
Vic rest of state, $550,000
Qld capital city and regional centres, $650
Qld rest of state, $500,000
WA capital city, $550,000
WA rest of state, $400,000
SA capital city, $550,000
SA rest of state, $400,000
Tas capital city, $550,000
Tas rest of state, $400,000
In announcing the plan on Sunday, 1 May, Mr Albanese estimated that the program would cut the cost of buying a home by up to 40 per cent for 10,000 Australians per year.
He noted that four decades ago, close to 60 per cent of young Australians on low and modest incomes owned their own home. Now, that figure sits at 28 per cent. Mr Albanese described this as a targeted approach for assisting that demographic.
The program is estimated to cost roughly $329 million over the forward estimates. To pay for this, and other housing affordability polices, Labor plans to double foreign investment screening fees and financial penalties.
During the same announcement, Mr Albanese pledged to establish a National Housing Supply and Affordability Council to focus on increasing housing supply and improving affordability, should his government be elected.
Labor also intends to create a $10 billion Housing Australia Future Fund to build 30,000 new social and affordable housing properties in its first five years, as initially revealed last year.
The industry reacts
The president of the Real Estate Institute of Australia, Hayden Groves, called the buyers’ assistance program “sensible”, noting the organisation has supported feasibility studies of Keystart programs such as this in the past.
Though he acknowledged that instituting such a scheme comes at a hefty cost.
“Whilst an expensive program to administer over the long term the benefits of home ownership to Australians are clear: they live healthier, happier and more successful lives in their working life and retirement,” Mr Groves said.
He also noted that the boon for the industry was substantial.
“Based on the median first home buyer home loan of $459,256 this will generate around $4.5 billion each year in sales based on current market conditions,” he said.
He had particular praise for Mr Albanese’s eye towards addressing supply issues.
“An evidence-based approach to a National Supply and Affordability Council with the right objective experts should provide a proper annual benchmark for Australia’s supply crunch.
“Only with dealing with supply will affordability barriers be overcome,” Mr Groves added.
Property Council chief executive Ken Morrison echoed these sentiments, saying the organisation “ strongly [welcomed] the proposed National Housing Supply and Affordability Council with its clear responsibility to collaborate on housing targets for each state and territory and advise on best practice solutions”.
He urged any such new body to be given enough power to be able to make an impact.
“The proposed new body needs to have teeth, with incentives and consequences for states and territories to ensure housing targets are met,” Mr Morrison said.
He also expressed support for the Help to Buy program, calling it an “important addition to the schemes already in place”.
National Shelter and the Community Housing Industry Association also gave the Labor Party’s plan a thumbs up, describing it as “a timely recognition of the urgent need to tackle intensifying housing unaffordability” in a joint statement.
Emma Greenhalgh, CEO of National Shelter, pointed to a similar scheme that’s been in operation in Western Australia for over a decade as proof that government equity programs create meaningful impact.
“We know that shared equity purchase initiatives to facilitate lower income households into home ownership work,” Ms Greenhalgh said.
She applauded the government for opening the scheme to all Australians who do not currently own a home.
“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,” she said.
Wendy Hayhurst, CEO of the Community Housing Industry Association, agreed, lauding the expansiveness of the Labor Party’s initiatives.
“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,” Mr Hayhurst said.
ABOUT THE AUTHOR
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.