Prime Minister Scott Morrison has attacked Labor’s proposed shared equity scheme for home buyers, which would see the federal government take a 30% to 40% share in their property.
Morrison claims Labor “wants the government to own your home”. However, he has previously supported similar schemes operated by state governments and the private sector:
Morrison said on Monday that the policy would see the government “effectively becoming an owner of your home”…
“As your home price goes up, your home value goes up, they are taking a cut, and so you have to pay the government back on their equity and with the capital appreciation. I mean, they are basically riding on your decision to buy your own home”…
Labor’s policy is based on the Victorian and Western Australian models…
When he was treasurer in 2017, Morrison said the Victorian government’s shared equity scheme was an “interesting” idea, and as shadow minister for housing in 2008, advocated a similar program with the private sector to “ensure mortgagees continue to have access to this viable option to reduce their mortgage burden, especially during the global financial crisis”…
Morrison said in 2008 that a shared equity scheme between lenders and banks would reduce mortgage stress for homeowners or reduce the upfront cost of a house purchase.
Meanwhile, Labor has already suggested that it will expand the 10,000 places earmarked under its Help to Buy shared equity scheme:
Mr Clare… said he had an “open mind” on expanding the number of available places beyond the 10,000 a year cap if there was “genuine appetite”…
The British government has also offered a “Help to Buy” equity loan for new homes, which a recent parliamentary committee report found did not provide “good value for money” for the taxpayer, and had inflated house prices.
What this election campaign shows is that both sides of politics pretend to care about housing affordability. Instead of undertaking genuine policy actions to address the true causes of Australia’s unaffordable housing, both have committed to demand-side policies – from home loan guarantees to shared equity schemes – designed purely to entice more entrants into the housing market and prop-up house prices.
The property-obsessed Coalition is doing what it has always done, whereas Labor has been scared out of genuine reform by its defeat at the last election.
The upshot is that regardless of which side wins, both will make the affordability situation worse at the margin by sucking in new marginal buyers, in turn placing further upward pressure on prices.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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