Berejiklian’s successor,Dominic Perrottet,has also promised to tackle housing affordability,and last weekThe Herald revealed a key part of his strategy – a shared equity scheme to help aspiring homeowners.
Under the plan,first-time buyers would receive a contribution from the state government for their housing deposit in return for equity in the property. This would be repaid in instalments or when the property is sold. Full details are yet to be announced including eligibility requirements,price thresholds and whether there will be a cap on the amount the government will contribute.
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So,will it help?
Economists tend to be sceptical about the effectiveness of policies that directly assist first home buyers,including shared equity schemes,for a simple reason:when demand for housing is strong,anything that helps first-time buyers spend more puts upward pressure on prices. And that ends up benefiting sellers at the expense of buyers.
“We’ve got almost 60 years of evidence showing anything that allows Australians to pay more for housing than they otherwise would have results in more expensive housing,not in higher home ownership rates,” says independent economist,Saul Eslake.
AMP chief economist Shane Oliver says the shared equity scheme will be “band-aid solution” at best and counterproductive at worst.