Federal Labor has detailed its key housing policy for the election campaign, offering to help 10,000 households a year into home ownership by dramatically cutting the price of a property.
Labor has outlined a new "shared-equity" scheme that it would enact in government, essentially buying 30 or 40 per cent of a property with the buyer.
That portion of the property would then be owned by the government, and could be bought by the home owner over time.
Labor estimates that it could cut the cost of a new home by up to $380,000 for some buyers in the most-expensive markets, and reduce the burden of mortgage repayments.
Both Labor and the Coalition have faced questions throughout the campaign about how they will address housing affordability, and the rising cost of living is expected to be a central theme at Labor's campaign launch in Perth today.
Sharing the cost of a new home
According to Labor, 10,000 spots would initially be made available in the scheme that would be open to people earning less than $90,000 as an individual, or $120,000 as a couple.
The scheme would not be restricted to first home buyers. Instead, it would be available for anyone who does not currently own a property.
Under the proposed scheme, those buying a property could have the government cover 40 per cent of a new home, or 30 per cent of an existing home.
The buyer would be left to purchase the remainder of the property — with a minimum deposit of 2 per cent — and would not be required to pay lenders mortgage insurance.
Once the property is bought, the owner would have the option to start buying more of the property from the government, or could simply leave the shared-ownership structure in place.
However, the owner would have to live in the property for two years and, if an owners' income increased, they would be required to start purchasing more of the property.
Labor says the scheme would cost $329 million over four years, but would also generate revenue of its own.
When a property was sold, the government would take its portion of whatever capital gains have been made.
Tight price caps in place
The scheme would not be available for just any property, with price caps in place for every state and territory.
A cap of $950,000 would be set for Sydney and major regional centres in New South Wales, and $850,000 for Melbourne and major Victorian regional centres.
Eligible Region |
Property price cap |
|---|---|
NSW — capital city & regional centres |
$950,000 |
NSW — rest of state |
$600,000 |
VIC — capital city & regional centre |
$850,000 |
VIC — rest of state |
$550,000 |
QLD — capital city & regional centres |
$650,000 |
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 |
ACT |
$600,000 |
NT |
$550,000 |
The proposed caps mirror those offered in the government's New Home Guarantee, which Labor has said would continue should it be elected, along with popular existing policies such as the First Home Loan Deposit Scheme.
A significant expansion to those schemes — including a tripling of the First Home scheme — was one of the government's key budget commitments and was agreed to by Labor.
Concerns have been raised before that adding demand to the market through those sorts of shared-equity programs would only see prices rise further.
However, it argued that targeting the scheme at the lower end of the market would ensure the impact was modest.
Similar schemes already in place
A number of similar schemes are already being run by state and territory governments.
Victoria's Homebuyer Fund offers to help with 25 per cent of a property, and has more generous income thresholds as well.
In Western Australia, the Keystart program does something similar, but with tighter income thresholds.
A federal parliamentary inquiry into housing affordability — which was chaired by Liberal MP Jason Falinski — looked at those programs and other shared-equity models.
While it did not specifically recommend setting up a national scheme, it took a fairly favourable view of the idea.
Labor hopes its scheme would work alongside those state-run schemes, and make the option more available to more people.
Its latest announcement is in addition to Labor’s existing housing policy, which involves setting up a $10 billion "Housing Australia Future Fund" used to build 30,000 social and affordable homes over five years.
