With the 2022 federal election campaign finally over, the ALP takes the reins of government in a tumultuous time for housing. Rising interest rates and inflation, wage stagnation, and the continuing – though slower – increase in house prices in many areas means it’s still extremely hard for people to purchase property.
Faced with this, all major parties took housing policies to the electorate. In fact, the difference in approach was one of the major differences between Labor, the Liberals and the Greens.
Counting continues as we write, but with a Labor-dominated lower house, we can assess the new government’s housing policies to see what it means to first homebuyers and the broader property market.
The new government has said it will build 30,000 new social and affordable housing properties in the next five years, and channel returns from those properties into a fund to pay for more low-cost housing projects. Some of these new properties will be targeted at women and children fleeing abusive relationships, as well as affordable housing for frontline workers like police, nurses and cleaners.
While 30,000 properties is just a fraction of what is needed to keep up with demand, the new government hopes increasing housing supply will reduce the cost of existing properties for renters and homebuyers.
Help with home ownership
This was the big housing-affordability announcement by the ALP during the campaign, although it again covers only a tiny number of people wanting to enter the housing market: In a move similar to schemes operating in Britain, Western Australia, Victoria and (soon) NSW, the government will chip in an astonishing 40% of the purchase price, with eligible buyers only needing a 2% deposit.
Opponents were quick to point out two big down-sides. First, only 10,000 properties per year will be able access the scheme. Expect a mad scramble. And, importantly, this isn’t a gift: the government will own 40% equity in your property. If you sell later, the government is entitled to 40% of your return.
There are various eligibility criteria including means tests and purchase-price limits, but the new government believes that, with deposits being the biggest hurdle to home ownership, this will free up more savings for buyers to finally get into the market.
And with savings of up to $380,000 in Sydney, $340,000 in Melbourne, $260,000 in Brisbane and at least $160,000 anywhere else in Australia, we’re sure this will be popular for the lucky few.
Ownership in regional Australia
Partly due to a COVID-19-related exodus of people from big cities, housing affordability in regional Australia – for buyers and renters – has never been worse. The new government will address this by guaranteeing a 15% deposit on houses purchased outside a capital city. This means homebuyers will only need a 5% deposit, and won’t have to pay Mortgage Lenders Insurance, which can cost upwards of $30,000 in Newcastle and NSW’s central coast, $23,000 on the Gold and Sunshine Coasts, almost $28,000 in Geelong, and between $10,000 and $15,000 in most other parts of Australia. Once again, there are tight eligibility criteria, and only 10,000 first homebuyers can access the scheme in its first year.
Remember: it’s politics
The government won’t have control of the Senate, and all legislation needs to be approved there too. This means it’s possible that some of these policies might never see the light of day. On the balance of probability, though, it’s likely these policies will become law over the next few months. At the very least, support will be needed by the Greens, who’s housing policy was to build 1 million publicly owned homes over 20 years. If there are negotiations, there might be pressure on the government to commit to more public housing.
Whatever happens, it’s important that you’re in the best possible position to move quickly if you are eligible for any of these new schemes. At Mortgage Broker Group, we can help first homebuyers prepare their finances, assess the many hundreds of home loans available across Australia, complete the paperwork, and get you on the fast track to owning your dream home.
Contact us today from anywhere in Australia. There’s never any cost to you for our services, and no obligation either.