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Anthony Albanese has pledged $329 million to assist more Australians in entering the property market.
Under the election promise policy, coined the Help to Buy scheme, the Labor government intends to pay an equity contribution of up to 40 per cent of the purchase price for a new home, and up to 30 per cent for an existing home.
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The scheme will be eligible to 10,000 households every year.
The federal opposition has said that Australians aged 18 and over with a taxable income of up $90,000 per annum or couples with a combined figure of $120,000, who currently don’t own or have an interest in a residential property, will be eligible for the initiative.
Under Help to Buy, home buyers will only be required to have a deposit of 2 per cent (or more) can qualify for a standard home loan with a participating lender.
During the loan period the homebuyer can buy an additional stake in the home when they are able to do so. The minimum stake that a homebuyer can opt to purchase at any one time is 5 per cent.
The scheme will not require borrowers to pay lenders mortgage insurance (LMI).
If the homebuyer’s income exceeds the Help to Buy gross annual income threshold for two consecutive years, they will be required to repay Labor's financial contribution in part or whole, as their circumstances permit.
Property price caps
For dwellings in Sydney and NSW regional centres such as Newcastle – which feature the highest cost cap under the scheme – the property price would be maxed at $950,000, offering a maximum saving of $380,000 on a new home.
Source: Australian Labor Party
The move adds to the previously-announced policies designed to improve housing affordability and ownership, including the Regional First Home Buyer Support Scheme, the Housing Australia Future Fund, and more funding to restore homelands and improving remote housing.
The Labor party has said that to help pay for these housing affordability schemes, it will double foreign investment screening fees and financial penalties. Should the party win the federal election on 21 May, these changes would commence from July 2022 and raise around $445 million over the forward estimates.
'After announcing the policy, Opposition leader Anthony Albanese said: “After nine long years in government, housing affordability has only got worse under the Liberal-National government,” Mr Albanese said.
“Help to Buy is part of Labor’s plan to tackle the housing crisis.”
Shadow minister for housing and homelessness Jason Clare commented that the current property market is blocking out many Australians – both prospective buyers and renters.
“It’s harder to buy, harder to rent and there are more homeless Australians than ever before,” Mr Clare said.
“Help to Buy will help Australians buy a home with a smaller deposit, a smaller mortgage and smaller mortgage repayments.
“This will help a lot of Australians buy a home with a smaller mortgage that they can afford to repay, instead of renting for the rest of their lives.”
However, despite the initiative covering Australians with lower incomes than the federal government’s Home Guarantee Scheme, albeit with a fewer number of places, the policy has been criticised by the Coalition.
Speaking to the ABC, the Federal Minister for Finance Simon Birmingham said that the government’s current scheme is helping “to lift the rates of first home ownership” and that it’s delivering outcomes for Australians while also allowing recipients to own their own home.
“You don’t have Mr Albanese at the kitchen table with you, owning part of your home with you,” Mr Birmingham said.
Greens leader Adam Bandt, while also speaking to the ABC, too challenged the scheme.
“It’s a small answer to a huge problem,” Mr Bandt said.
“They call it their ‘Help to Buy’ scheme. It should be called the ‘Hard to Get’ scheme. There’s only going to be about 5 per cent of first home buyers that are going to be able to get it.
“And it might, in fact, push up [house] prices”.
According to data released by Domain late last month, as of March, the current average price for a house in a capital city is $1.07 million, reflecting a year-on-year growth of over 18 per cent.
[Related: Government boosts max property prices for home guarantees]
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