Shared equity schemes can help moderate-income earners because they reduce both the total loan amount as well as the deposit needed to buy a home. Several Australian states have modest schemes like this in place and they are well established in Britain. But unless they are targeted to dedicated new housing stock,Labor’s scheme may simply contribute to more house price inflation. The Greens’ shared equity scheme aims to underwrite a more ambitious 125,000 homes and is targeted at key workers.
The Liberal Party’shome deposit guarantee scheme allows moderate to higher income earners to take out home loans with only a 5 per cent deposit (or 2 per cent for single parents). Labor has a similar scheme for up to 10,000 first home buyers in regional areas. While likely to be popular with eligible first home buyers,experts have criticised the approach as fuelling demand without contributing to new housing supply. Worse,the scheme encourages first home buyers to take on very high levels of debt,at a time with interest rates are projected to rise,but the property market expected to cool.
What about renters? And with rents beginning to escalate especially in regional areas,the fastest relief for renters would be to increase rental subsidies,but neither party has promised to extend or increase rent assistance beyond the consumer price index.
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The two major parties do not want house prices to fall because high house prices make the two-thirds of Australians who already own their homes feel wealthier,and that supports consumer confidence. Buoyant house prices also support new construction,one of Australia’s largest industries of employment. The combined spectre of rising costs of living,interest rate hikes,and falling house prices will exacerbate pressures across the entire economy.
With these economic headwinds gathering,it is mystifying that neither of the major parties are offering a significant boost to new social and affordable housing supply. Labor has made a modest commitment to increase the supply of social and affordable homes,funding 30,000 over the next three years. But with research pointing to a current undersupply of about half a million such dwellings,this promise is not enough.