Politicians housing plans will send prices through roof
Fresh housing policies from both the major parties may end up pushing up house prices, economists are warning.
FIRST-HOME buyers are back in the eye of the storm as the major parties tout differing policies to give young people a leg-up.
Hopeful homeowners would only need to save up a five per cent deposit and houses will be built specifically for first-time buyers under Labor’s plan.
The coalition will let first-time buyers deduct interest payments against their taxable incomes on the first $650,000 of a mortgage on newly-built homes.
Announcements pitched at Australia’s younger generations have featured prominently in federal elections in recent times as rates of home ownership have been on the decline.
But economists are warning they will drive already unaffordable house prices even higher.
“They’re both inflationary,” SQM Research managing director Louis Christopher said of Labor and the Coalition’s plans for housing.
“You need to model this stuff up but for a finger-into-the-wind guess, you would see prices rise 8-15 per cent, 12 months after the polices were enacted.”
Independent economist Saul Eslake said both announcements from the major parties at their official campaign launches would push up house prices.
“This is a bad day for aspiring home-buyers,” he said.
The economist was particularly sceptical of the coalition’s proposed saving of about $12,000 with a taxable income of $120,000 under its proposal.
“They will take out bigger mortgages,” he said.
“And so house prices will go up.
“As they always do.”
Any policy allowing Australians to spend more on housing than they otherwise would have been able to leads to more expensive housing and fewer people entering the market, the economist explained.
Labor’s five per cent deposits also falls into that category, though Mr Eslake said it would be less of a burden on the federal budget.
Building new homes for first-time buyers would help “at the margins”, he told AAP, helping to boost all-important supply.
Labor Housing Minister Clare O’Neil said the government needed to start delivering homes directly because the private market was struggling to supply affordable homes.
“The fundamental problem we have is that the cost of building is too high and it can’t be met by people who are borrowing money and buying homes,” she said.
