Late last year, the Productivity Commission (PC) released a report entitled “In need of repair: The National Housing and Homelessness Agreement”, which derided decades of housing policy failures by all levels of government.
The report called for better targeting of housing assistance towards low-income renters, alongside an end to demand-side policies like first home buyer grants, which “works against improving affordability”.
“The $16 billion governments spend each year on direct housing assistance could achieve more if it was better targeted to people in greatest need”, the report notes.
“The nearly $3 billion given to first home buyers works against improving affordability. This money would be better spent preventing homelessness”.
The Australian Housing Urban Research Institute (AHURI) also found that the $20 billion spent by Australia’s governments to ‘help’ first home buyers into the housing market has actually made housing affordability worse and increased inequality.
Over the weekend, it was reported that the Albanese Government will throw more good taxpayer dollars at bad demand-side housing policy, by expanding the eligibility for its Home Guarantee Scheme (HGS), which includes three different Guarantees:
- First Home Guarantee, which supports eligible first home buyers with a deposit as little as 5%.
- Family Home Guarantee, which supports eligible single parents with a deposit as low as 2%.
- Regional Home Buyer Guarantee which helps regional buyers enter the housing market.
Under the scheme the federal government acts as a guarantor making up the majority of a loan for prospective buyers.
Lenders Mortgage Insurance (LMI) is also waived.
The changes to the HGS are summarised in the below graphic from 10 News:
Federal Housing Minister, Julie Collins, told Weekend Today that the eligibility expansion is about “moving with the times”.
“What we are doing here, is widening the eligibility criteria. What we want to do is support more Australians to get into a home”, Collins said.
Instead of hosing more taxpayer dollars on enticing sub-prime borrowers into the housing market, and making affordability worse.
Why not spend the money on social housing, which is desperately needed?
While you are at it, why not reduce immigration to historical levels of less than 100,000 people a year, thereby alleviating the housing shortage?
The answer as to why housing minister Julie Collins won’t consider these sensible alternatives is encapsulated by the below graphic:
Julie Collins owns multiple properties, and it is in her financial interest to continue pumping the market higher under the guise of affordability.
