The Australian Housing Urban Research Institute (AHURI) published a report last year claiming that the $20 billion spent by governments to assist first-time homebuyers into the market over the prior decade had increased inequality and made housing less affordable.
“In doing so, these measures add to demand and hence to house prices”, the report said.
The Productivity Commission has also called for the abolition of first home buyer subsidies, which it said “works against improving affordability”.
The federal government has introduced legislation to establish its Help to Buy scheme.
Labor announced the shared equity scheme ahead of the 2022 election, which intends to help 10,000 low and middle-income earners a year buy their own home, with the government to provide up to 40% of the purchase price in return for an equity stake of a similar amount.
Eligible participants will need to pay a minimum 2% deposit and still qualify for a standard home loan to fund the outstanding amount. They also won’t need to take out lenders’ mortgage insurance.
The Help to Buy scheme is projected to cost $329 million over its first four years, with the scheme available to homebuyers with a taxable income of up to $90,000 for individuals and up to $120,000 for couples.
Housing Minister Julie Collins says the shared equity scheme will put home ownership within reach for thousands of Australians, particularly renters.
“Right across the country Help to Buy will be life changing, bringing home ownership back into reach for thousands of Australians, particularly renters”, Collins said.
“It won’t just be a leg up into home ownership with savings from a smaller deposit – it will provide long-term relief to Australians who are part of the scheme”.
AMP chief economist, Shane Oliver, described shared equity schemes like Help-to-Buy a “band-aid solution” at best and counterproductive at worst:
“To the extent that it brings forward demand, there’s a risk this worsens the problem and benefits those already in the property market through higher prices”.
Labor’s Help to Buy scheme is another in a long line of housing policy gimmicks that addresses the symptoms not causes, and will makes affordability worse.
