Government’s first homebuyer scheme accused of fuelling housing market panic
The supercharged first-home buyers scheme has sparked a wave of panic buying, as NIMBY councils failing to approve new homes are identified.
The Albanese government has been accused of “adding fuel” to an already blazing housing market after its expanded first-home buyers scheme last month launched a wave of panic buying.
In a double tap to the housing crisis, data shows the first month of the supercharged guarantee scheme saw spikes across the real estate market, while the Australian Bureau of Statistics housing report shows some Sydney councils are lagging more than 70 per cent behind their housing approval targets.
Real estate experts told The Daily Telegraph that further rises in house prices were likely to come as more first-home buyers streamed into the market, as the supply of new housing flatlines.
AMP chief economist Shane Oliver told this masthead there was “already evidence the scheme was pushing up prices”.
“Demand-side schemes put upward pressure on prices. It was to be expected. History tells us first-home buyer schemes result in higher prices,” he said. “It is not the solution to poor affordability.
“If we want to help first-home buyers, we have to increase housing supply.
“The optimistic view of the (guarantee) scheme is that by increasing demand it will encourage more home building, but even if there is an increase in supply, it might be years away.”
He noted NSW was still building well below the levels needed to meet targets in the National Housing Accord.
ABS data, released Monday, showed North Sydney Council had approved just 386 homes during the National Housing Accord – just 26.2 per cent of the homes forecast to have been approved local government area during this period – while Strathfield and Willoughby councils had greenlit just 240 and 260 respectively.
Meanwhile, Waverley Council approved a total of 187 homes during the same period, as Woollahra Council recorded 174 new homes in the pipeline.
Hunters Hills Council approved the least number of homes under the accords, with just 33 homes.
In comparison, 4213 homes had been approved under the accords in The Hills, while 3726 homes were given the tick of approval in Parramatta.
Urban Taskforce boss Tom Forrest said housing in NSW was key to achieving National Housing Accord targets.
“We’re still a long way behind the 76,000 dwellings we need to deliver each year, but approvals are on the improve,” he said.
Weekly applications from buyers spiked 35 per cent across NSW in October, as the scheme was widened, according to Loan Market Data.
Meanwhile, mortgage comparison group Finder.com.au reported a 1,028 per cent increase in traffic to its lower deposit home loans page, compared to October 2024.
Finder home loans expert Richard Whitten said the expanded scheme, coupled with interest rate cuts, had the potential to create real “upwards pressure on prices”.
“In the longer term, the scheme simply pushes prices up and makes it slightly cheaper for borrowers who could already afford a property.
“It’s a policy … that subsidises demand but doesn’t address supply. So buyers today might save a little money, but borrowers tomorrow will have to pay even more.”
Meanwhile, Cotality researcher Eliza Owen told ABC News that while price rises coincide with the expansion of the deposit scheme, “we have to remember that seasonally in spring you get a bit of a bump”.
She also flagged price rises could be a result of a reduction in interest rates, “which increases credit availability to spend on housing and supply levels are low, so that tends to increase competition and prices as well”.
While experts said the scheme would result in significant increases in house prices, Federal Treasury analysis indicated that the impact on house prices from the scheme would see a 0.5 per cent increase in house prices after six years.
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A spokesman for Housing Minister Clare O’Neil said there were “green shoots” across the sector, with approvals up 71 per cent on last year in NSW.
“We know that housing is incredibly tough – that’s why our main focus is on building more homes to improve affordability – but we won’t say that there’s no help for first home buyers until we’ve turned the tide on a crisis 40 years in the making,” he said.
“Completions are a lagging indicator of the mess we inherited from the Coalition – 17 per cent construction cost, inflation and collapsing approvals.”
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Originally published as Government’s first homebuyer scheme accused of fuelling housing market panic
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