On Wednesday, the rush to the bottom by Australian policymakers to pump housing demand entered yet another chapter, this time with multiple state government’s taking their turn.

At the federal election, the Albanese government promised a 5% deposit scheme that would cover the overwhelming majority of first home buyers.

This comes in spite of the fact that the federal government’s own Productivity Commission concluded that fueling first home buyer demand with government support was counterproductive.

“It is not typically home buyers who benefit from the assistance, it is the sellers who receive a higher sale price,” the report stated.

“What this means is that assisting home buyers can make housing less affordable, particularly for people who do not qualify for assistance.”

“We’re also going to expand our 2% deposit scheme. And if you qualify for the $30,000 grant, you should be able to use it to cover the 2% deposit (and then some!).”

What a deal, eh? The ability to get a $30,000 grant and a mortgage with just a 2% deposit and then potentially pocket the difference. That’s modern day Australian innovation if I’ve ever seen it.

Housing Prices

Meanwhile, if we look at a chart of housing prices for Queensland and Tasmanian, they have absolutely skyrocketed since the pandemic, far in excess of wage growth.

In the last 5 years, the remaining bastions of affordable housing in the two states have dwindled considerably, to the point where now the median house even in regional Queensland is no longer affordable for someone on a local household income and even in Tasmania, it’s an absolute photo finish.

It’s perhaps no surprise that we are seeing the push to pump housing demand higher increasingly in the hands of the states, as unaffordable housing bites across much of the nation where people are far less accustomed to homes being unaffordable than in Sydney or Melbourne.