Lanai Scarr and Sarah StegerPerthNow
May 13, 2019 2:00AM
The battle over housing is on in the last week of the election campaign with Scott Morrison vowing to make it easier for first-homebuyers to get into the market.
Launching the Coalition’s official bid for re-election, the Prime Minister yesterday unveiled a plan that would enable young people on single salaries of $125,000 or couples on a dual income of $200,000 to only require a deposit of 5 per cent to buy a new home.
The remaining up to 15 per cent of their loan would be guaranteed by the government, saving buyers about $10,000 in lenders mortgage insurance.
The funds would be guaranteed for the lifetime of the loan and if buyers default the taxpayer would be up for the bill via $500 million in equity through the National Housing Finance and Investment Corporation.
The policy was matched by Labor immediately but sector experts say more detail is needed to determine if the measure will have as big an impact as hoped, with the Government yet to decide on regional caps for home purchase prices.
And some suggested the scheme, which will start from January 1 next year, may result in first-homebuyers overextending themselves or become a mechanism that keeps property prices unfairly high.
Even the peak first-homebuyers association said Labor’s reforms to negative gearing and capital gains tax would be better drivers to bring down house prices and get more first-time buyers into the market. “It could work out as a negative for first-homebuyers in the long run because it could keep house prices high,” First Home Buyers Australia director Taj Singh said.
“Labor’s reforms to negative gearing and capital gains are ultimately still a better plan as they will bring down prices overall.”
Mr Morrison said the policy was modelled on a similar policy in New Zealand.
He said it would give Australians wanting to buy a home “the first leg up on the first rung of the ladder”.
The NHFIC would partner with private lenders to deliver the scheme, prioritising smaller lenders to boost competition.
Australian Finance Group chief executive David Bailey said for West Australians in particular the scheme would be a welcome relief. “We’ve been on record saying the WA housing market has been problematic for last couple of years so any stimulus should be welcomed,” he said.
“Particularly in the WA market this will be a very good thing.”
Entrepreneur Dick Smith said he worried it might “encourage young people to get into tremendous debt”.
Louis Christopher from SQM Research said any regional cap on house price needed to be reasonable and warned that the expected uptake might not be as great if caps were too low in cities where house prices were high.
Gus Ledauskas, 31, and his wife Karolina Ledauskiene, 29, are just two of 10,000 Australians who could benefit from the policy.
The couple, who were at a home inspection in Tuart Hill yesterday, have been looking for their first home for several months, and welcomed the announcement.
Real Estate Institute of WA president Damian Collins said the scheme was “certainly welcomed” as was anything that “gets more people into buying a home”.
He said it was encouraging to know the scheme would come through regardless of the election outcome.
“It will get some more homebuyers into the market, especially those who did have a deposit but didn’t want to pay a mortgage insurance,” Mr Collins said.
“WA has already had a good State-based program with Keystart, but this will certainly help more people and give them more options.”
Mr Collins said he was concerned about the scheme’s start date, slated for January, and encouraged both parties to shorten the time line.
“It might cause a delay (in the market) … people who were going to buy now and are ready to do so might sit on the sidelines and wait now, which could impact the market,” he said.
“A wiser idea would be to bring it forward.”
Shadow treasurer Chris Bowen said Labor would match the commitment.
Labor will today launch a blitz reminding Australians of the 2014 Abbott government Budget which they say was a disaster.
“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.