Frydenberg summons more home buyer patsies

Advertisement

With demand from first home buyers (FHBs) beginning to wane, Treasurer Josh Frydenberg flagged over the weekend that Tuesday’s federal budget will contain a range of new subsidies to improve ‘housing affordability’ under a so-called “family home guarantee package”.

Under the changes reported in the Weekend Australian:

  • A government-guaranteed home loan scheme will be offered to more than 125,000 single parents, which will allow them to purchase a home with as little as 2%. “In Sydney, this would see single parents requiring a deposit of just $14,000 based on a property worth $700,000, down to just $5000 for a home in regional South Australia worth $250,000”.
  • Access to the first-home super saver scheme will be expanded from $30,000 to $50,000.
  • An extra 20,000 places will be offered under the existing first home loan deposit scheme, which allows people to acquire a mortgage with only a 5% deposit, with risk underwritten by taxpayers.

A senior government source told The Australian that the single parent subsidy schemes are “likely to be open-ended, with more places being offered over time depending on demand”.

Advertisement

Clearly, home buyer subsidies are now a permanent feature of the Coalition’s fake housing affordability policy.

Like all demand-side measures, these policies will add more fuel to the housing bonfire, pushing up dwelling values even further, and worsen actual affordability.

Anything to keep the ponzi scheme going.

Advertisement
About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.