How Rose bought a home without the bank of mum and dad

Rose Bishop lived in share houses for almost two decades until she found herself in lockdown in a rental with black mould.

It made her realise how much she craved the security of owning a home – a dream always out of reach for the public servant, 39, who grew up in a regional town and couldn’t call on her parents to chip in a deposit.

Rose Bishop realised in lockdown how much she wanted to own a home.Credit: Wayne Taylor

The mould made her sick, the landlord ignored her pleas for help and Bishop decided she’d had enough.

“It made me realise the best place to start for financial security would be a home that I own,” she said.

With help from a shared-equity program similar to the federal government’s scheme that passed parliament this week, she was able to buy a one-bedroom apartment in mid-2022.

The new law will help 10,000 households every year to co-buy a home with the government, but experts warn it won’t solve Australia’s years-long housing affordability crisis.

The scheme has been mired in negotiations as Labor proposed to help low and middle-income households that have small deposits by buying 30 per cent of their property, or 40 per cent for new homes. The Greens’ support was conditional on the introduction of rent caps and higher social housing spending, but they dropped their demands this week, while the Coalition’s policy is to allow first home buyers access to superannuation.

Housing experts warn affordability is now so stretched that a range of measures is needed at each level of government to make progress.

One measure that various state governments have tried is shared equity. Bishop used the Victorian Labor government’s Homebuyer Fund to buy her unit in inner Melbourne’s Travancore.

She had scraped together a modest deposit, enough for only an investor-grade CBD apartment, and came across the state scheme, which allows individuals on a salary of $135,155 or less to buy a home worth up to $950,000.

It meant she had 25 per cent of the purchase price covered, boosting her budget. “It just took my buying power up to something nice, something liveable,” she said.

She paid $320,000 for an apartment in a 1970s block that she couldn’t have afforded to rent.

“I am very passionate about people who weren’t from high-income backgrounds or who don’t have financial support from elsewhere being able to be in a position to just have housing dignity,” she said.

After her experience, she recently became a member of a political party – but it wasn’t Labor. She joined the Greens.

Housing expert Brendan Coates backs the federal shared equity scheme as a missing piece of the puzzle that will help some people into home ownership who don’t have family help, or who are older and divorced.

“It’s obviously not a silver bullet. This is another step towards solving the problem, but there are many more steps we need to take,” the Grattan Institute housing and economic security program director said.

He would like to see more homes built to meet the needs of a growing population but also a wealthier population that is demanding more space.

Commonwealth Rent Assistance needed to rise and more social housing needed to be built, he said.

“In a world where people are getting desperate and they are not confident governments are delivering for them, they can be tempted to look at things that sound good and won’t help,” he said.

For example, he said that a rent freeze could make it difficult for tenants to find a new rental. ACT-style limits on rent increases could be rolled out elsewhere, he said, but would need investment in data collection to measure rent inflation.

He hopes the political conversation is changing as the share of Millennials and Generation-Z voters increases.

Independent economist Saul Eslake urges more supply, including social and affordable housing and planning changes to boost private-sector building.

Eslake said the shared equity scheme would help those who could access it. He warned that increasing demand for housing could push prices up, although he thought the limited size of the scheme meant any effect would be small.

He would like to see first home owner grants and mortgage guarantee schemes abolished, stamp duty replaced with a broad-based land tax, negative gearing restricted to new housing and the capital gains tax discount reduced.

But he notes that about 11 million Australians live in homes they own and only 100,000 buy their first home each year, which discourages politicians from limiting house price growth.

“The only thing that might be changing that is the extent to which among people my age there is either an altruistic concern around whether their kids will be able to achieve home ownership, or alternatively a less altruistic one that says, ‘Why can’t I get my 30-year-old son and 34-year-old daughter out of my house?’”