How and where: Labor must supply details on housing scheme

Labor insists it will build thousands of houses for first-home buyers cheaper than the private sector, as experts warned its radical housing plan had too little detail.

Housing Minister Clare O’Neil was unable to detail the exact impact the expansion of Labor’s scheme could have on house prices but, if any, it would be “small”. Picture: NewsWire/Martin Ollman

Labor insists it will build thousands of houses for first-home buyers cheaper than the private sector, as experts warned its radical housing plan had too little detail and the nation’s biggest builders gave Anthony Albanese’s push a muted response.

Announced during Labor’s set-piece campaign launch in Perth on Sunday, Mr Albanese said a re-elected government’s “5 per cent deposit plan” would be a “generational change” helping Australians “stranded just below the first rung on the property ladder”.

It would give all first-home buyers access to 5 per cent deposits, with the commonwealth guaranteeing their mortgage to avoid them paying lenders’ mortgage insurance. Introduced by the former Morrison government in 2020 and expanded by Labor, the revamped home guarantee scheme would loosen eligibility requirements, a move that will double the demand for the program at a time when housing supply remains constrained.

But Labor’s promise of $10bn to build 100,000 homes exclusively for first-home buyers is not immediate and those properties will not be built until the 2028 financial year.

Housing Minister Clare O’Neil was unable to detail the exact impact the expansion of the scheme could have on house prices but, if any, it would be “small”.

“(That proposal) is not a significant impact on house prices,” she told ABC’s Insiders.

“The scheme is already in operation and it's proven to work. We've gone from 10,000 homes a year to 50,000 homes a year under this scheme, with no discernible impact on prices.

“We have 700,000 property transactions happening in Australia each year. We’re talking about a pretty narrow band of new first-home buyers in the market.

“We want more first-home buyers in the market. If we’re not willing to accept that, then we’re basically saying we’re not going to do anything to help these young people, and our government won’t tolerate that.”

REA Group senior economist Angus Moore urged for clarity on exactly how Labor’s $10bn supply-side proposal would work. “The details will matter enormously: how and where and whether we can deliver these homes are key questions,” he said. “Building more homes where people want to live is the only way we’ll sustainably make housing more affordable, but there are a lot of challenges to doing that – as evidenced by the fact we’re well behind the 1.2 million homes target set by national cabinet.”

Labor insists it will build thousands of houses for first-home buyers cheaper than the private sector. Picture: Asanka Ratnayake/Getty Images

Oliver Hume Property Group chief executive officer Julian Coppini said both Labor and the Coalition’s proposals needed to correspond with efforts to “rapidly accelerate” housing supply around major growth corridors.

“Policies that encourage more buyers into the market without a corresponding increase in supply will lead to higher prices and a continuation of the affordability issues currently facing first-home buyers,” he said.

“We will not shift the dial on affordability until we acknowledge and address the fundamental supply issue. Any housing policy without planning policy reform is a recipe for more of the same.”

Independent economist and property expert Cameron Kusher said Labor’s policy – and the Coalition’s – “massively stimulated demand” but did “very little for supply”.

“The Coalition policy is targeted at new houses and Labor is talking of building 100,000 new homes for first-home buyers, but each policy still comes with a huge demand-side stimulus,” he said.

“The housing problem in Australia isn’t one of too little demand, it’s one in which the cost of housing is far too high. More supply can help to address that but more demand just exacerbates that issue, especially as we are facing lower interest rates.”