Housing plan will push up prices
House prices could be pushed up a “very small amount” under the government’s shared equity scheme, which could also limit the types of properties first-home buyers could purchase, economists say.
As Labor battles the Greens to get its next tranche of housing policy through the Senate, economists appeared before a senate committee on Tuesday, divided over what impact the Help to Buy scheme would have on house prices and the market more broadly.
The scheme passed the House of Representatives last week without the support of the Greens or the Coalition and is being examined by senators before the Bill is voted on.
The program would allow up to 10,000 first-home buyers a year for four years to co-purchase a house with the government via the Housing Australia agency with a 2 per cent deposit. The government would take equity of up to 40 per cent in a home to lower deposit and loan servicing costs.
The government needs the support of the Greens and the senate crossbench to make the scheme a reality.
Appearing at a senate committee on Tuesday, Grattan Institute economist Brendan Coates said the scheme could have an impact on house prices, but it would be “very small” and on the whole wouldn’t be inflationary.
“If we have 40,000 places, it will be close to zero impact on house prices in the context of Australia’s $10.3 trillion housing market,” he said.
Australia Institute senior economist Matt Grudnoff said because the scheme would increase demand for housing, it would increase the price of housing.
“At 10,000 properties per year (in the Help to Buy scheme), this is so small it’s unlikely to have a significant impact on overall house prices,” he said.
Mr Coates said the scheme would be particularly helpful for older, single Australians.
“We know that if you do not own your own home in retirement, on current trends, about just under half of those people are currently living in poverty,” Mr Coates said.