‘Cut in half’: Prime Minister Scott Morrison announces housing market shake-up

First homebuyers spend almost a decade saving up for a house deposit. The Coalition plans to change that in a bid sure to lure young voters.

First homebuyers won’t have to save for a 20 per cent deposit anymore.

Housing affordability has been propelled back to the forefront of the political debate in the dying days of the election campaign.

For years the argument has been dominated by Labor’s proposals to reform negative gearing and capital gains tax.

Prime Minister Scott Morrison was seemingly content to sit back and attack those policies, particularly after the recent fall in house prices.

But Mr Morrison surprised Australians with a new policy of his own during his speech at the Coalition’s campaign launch in Melbourne today.

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The Prime Minister often points to figures showing a resurgence in first homebuyers to defend his government’s record on the issue. Today, he admitted it was still too difficult for people to break into the property market.

“We need to go further. It’s hard to save for a deposit. Especially with the banks pulling back and larger deposits of 20 per cent now being standard,” he said.

“It is not getting easier. We want to help make the dreams of first homebuyers a reality. So we have decided to go further at this election.”

Prime Minister Scott Morrison launching his first homebuyer scheme. Picture: William West

The new policy he announced is similar to one the New Zealand government has been running for years. It will allow first homebuyers below a certain income threshold — $125,000 for singles, $200,000 for couples — to secure a home loan with a deposit of as little as 5 per cent.

“This will make a big difference, cutting the time taken to save for a deposit by at least half,” Mr Morrison said.

He stressed the scheme was not “free money”, and the usual checks banks run on borrowers would still apply.

“They will still do all the normal checks on the borrowers to make sure they can meet their repayments,” he said.

But the Prime Minister argued the idea would help people get “their first leg on the first rung” of the property ladder.

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The Liberals’ campaign spokesman Simon Birmingham was asked to elaborate on the policy when he appeared on the ABC after Mr Morrison’s speech.

“This is a pretty direct intervention into the mortgage market on face value, isn’t it? Why is the government seeing a role for itself in this deposit scheme?” Mr Birmingham was asked.

“Because it goes very much to the core of traditional Liberal values — of wanting to help people establish their own economic security,” he replied.

“We know that buying a home is one of the best things that people can do to set themselves up for the future. And we know and hear on the ground that getting to that 20 per cent deposit target is a real challenge for many young Australians in getting themselves set up.

“That is why we have made changes over the last couple of years to enable people to use superannuation as a vehicle for saving for that deposit. We still think that we would be able to do more. Not to be able to give away money, but to be able to just help people access the loans required to be able to then buy their first home.

“They don’t have to wait so long to build that 20 per cent deposit, but to get there sooner, quicker, and therefore be able to start paying off that loan and building their equity.”

In a statement, shadow treasurer Chris Bowen said that Labor will match Mr Morrison’s commitment if elected.

“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.

“First home buyers know the Liberals are out of touch and only for the top end of town.

“We back genuine support for first home buyers — that’s why we are also reforming negative gearing for future purchases, so young Australians don’t have to keeping losing out to wealthy property speculators.

“We can afford to deliver a fair go for all Australians and reverse the Liberals’ cuts, because we are closing down loopholes for the top end of town.

“Morrison will keep spending billions of dollars on loopholes for wealthy investors to buy their 6th or 7th house.”