Will a Labor Win Help Home Buyers?

by Carlisle Homes

So, what do the recent election results mean for homebuyers?

The election campaign featured a lot of rhetoric about cost-of-living pressures and, as always, housing affordability. But now that the democracy sausages have been consumed and the counting is (almost!) over, what can hopeful home buyers really expect?

The 21 May 2022 election saw a change of government, with Anthony Albanese sworn in as the next Prime Minister of Australia under a Labor government.

Labor’s housing policies have focused on help for first home buyers, both via a deposit guarantee and a shared-equity model. They have also set aside funding for social and low-income housing.

The ‘Help to Buy’ scheme

This was the headline policy for Labor, and might allow home buyers to purchase with a deposit as low as 2% while also avoiding high mortgage repayments and lender's mortgage insurance.

The scheme is eligible to buyers who:

• Are Australian citizens over 18 years old
• Earn less than $90,000 for an individual or $120,000 for a couple
• Have not bought or owned property before
• Are going to live in the property as their principal place of residence

Under the scheme, you may buy the property with as little as a 2% deposit. The government will make an equity contribution of up to 40% for a newly built house or 30% for an existing home. Price caps apply, and there are only 10,000 places per year.

Buyers will only need to finance the remaining purchase price of 60% or 70% (less deposit), with no need for lenders mortgage insurance. 

How much could you save? On a new build in Melbourne costing $850,000, the scheme represents a saving of $340,000.

The catch? The government owns part of the home until you pay back their contribution. That means that if you sell, the government will reclaim their proportion of the equity - plus any capital gains. 

The regional first home buyer support scheme 

Under this scheme, up to 10,000 regional first home buyers can secure a home with a deposit of just 5%. The government will then guarantee the remaining 15% required by the banks, thus obviating any need for lenders’ mortgage insurance.

To be eligible, buyers must meet all the same criteria as under the ‘Help to Buy’ scheme, but income caps are higher. Individuals can earn up to $125,000 and couples up to $200,000.

Labor estimates that a buyer who purchases a $700,000 property in Geelong can save up to $27,954 in mortgage repayments.

The Housing Australia Future Fund

The ‘Housing Australia Future Fund’ is a $10 billion investment fund, with the returns slated to build new social housing and affordable housing. Over the next five years, Labor estimates that the fund will provide: 

• 20,000 social housing properties. 4,000 homes will be prioritised for women and children fleeing domestic or family violence, and for older women at risk of homelessness.
• 10,000 affordable housing properties for front line workers (for example, police, nurses and cleaners)
• 21,500 jobs per year across the construction and broader industries, including 1 in 10 apprenticeships.
• $200 million to repair and improve substandard housing in remote Indigenous communities
• $100 million for crisis and transitional housing for women and children fleeing family violence, and for older women at risk of homelessness
• $30 million for housing and specialist services for veterans who are experiencing homelessness or are at risk of homelessness

Will the policies affect housing prices?

Notably absent from Labor’s policies is any change to negative gearing. This was a policy in the 2019 campaign, and Labor has been clear that they don’t intend to bring it back. In general, Labor’s policies seem to be aimed at getting more people into their own houses, without making changes to existing house prices or threatening investment value.

It’s not yet clear how soon the policies will be implemented, but one thing is for sure. If you’ve been thinking of taking the leap and buying that first house, now might be the perfect time to see if you’re eligible for any assistance.