Labor battler pitch
A LABOR plan to help more low-income earners buy their first home by staking some of the cost could actually drive prices up, an economic commentator has warned.
Housing industry bodies welcomed Labor’s commitment to cover an equity stake of up to 40 per cent of the cost of a new house, saying it would help more Australians buy their first home.
But a commentator said the policy would not cause the housing market to stabilise or put any downward pressure on prices.
The Motley Fool’s chief investment officer Scott Phillips slammed Labor’s scheme as an “atrocious” version of the government’s first home buyers grant “on steroids”.
While he panned the Coalition’s “non-policy” on housing, Mr Phillips said Labor’s alternative amounted to a government being an “equity partner in an unaffordably-priced asset”. “They’re choosing to buy at the top,” he said. Prime Minister Scott Morrison said under Labor’s policy, Anthony Albanese wanted to take a “cut” of the house value.
“They’re looking to make money out of this, they will have equity in your home,” he said.
Defending his party’s own housing policies, Mr Morrison argued Australians dreaming of owning a home “understand” it was not possible for everyone and “no government” could promise it was.
Economist Saul Eslake said Mr Morrison’s policies on housing had tended to make affordability for first-time buyers “worse rather than better”. “The general problem with the policies of both sides in the last few years is they tend to do more to increase demand than boost supply,” he said.
“Labor’s scheme is reasonable, well devised in that sense in that the number of places under it is limited.
“It would put upward pressure on prices but I don’t think the effect will be any greater than existing schemes.”
Mr Eslake said Mr Morrison’s comment that no government could offer every Australian homeownership would have former prime minister Sir Robert Menzies “turning over in his grave”.
Greens leader Adam Bandt said Labor’s proposed housing policy wouldn’t make housing more affordable, calling it a “small answer to a huge problem”.
“There will only be about 5 per cent of first home buyers who will gets it and it might in fact push up prices,” he said.
Labor’s Treasury spokesman Jim Chalmers said it was a “long-term policy for a long-term problem”.
“This is about making people’s mortgages smaller in the context of rising interest rates,” he said.
Masterbuilders chief Denita Wawn welcomed Labor’s new policy, saying combined with the Opposition’s other housing announcements, they were focused on “both supply and demand issues to tackle housing access and affordability”.