Latest news with #FirstHomeBuyersGuarantee
Sky News AU
3 days ago
- Business
- Sky News AU
Labor needs to 'step up the pace' after housing approvals slump, REA Group senior economist Eleanor Creagh declares
Labor needs to 'step up the pace' to fulfil its ambitious housing target, an economist has warned as the rate of building approvals in Australia recently slumped. Dwelling approvals fell 5.7 per cent in April, according to the Australian Bureau of Statistics, coming in well below market expectations and causing concern as the nation continues to grapple with a housing shortage. While the approval trend has been positive over the past year and a half, the recent downturn is a thorn in the side of Labor's plan to deliver 1.2 million new homes by mid-2029. REA Group senior economist Eleanor Creagh urged for greater action to fulfill the major looming target. 'We're really not approving and then building enough new homes to meet pace with where demand currently is and also to meet the federal government target of a million new homes by 2029,' Ms Creagh said on Sky News' Business Now. 'So, we really need to step up the pace of: one, approvals—which is really the best-case scenario for what gets off the ground; two, building activity—which is hard, given continued labour shortages and higher prices, cost materials, etc.; and then, three, completions.' The overall decline in April was driven by lower apartment approvals, according to the ABS' head of construction statistics Daniel Rossi. 'A drop in apartment approvals drove a 19 per cent fall in private dwellings excluding houses,' Mr Rossi said. 'Meanwhile, private sector house approvals were up 3.1 per cent.' This followed a 14.4 per cent drop in March as apartment approval rates have sank compared to the start of the year. 'In original terms, 5,612 apartments were approved across March and April, compared with 8,625 approved across January and February,' the ABS said. Alongside its pledge to build 1.2 million homes, Labor has also committed $10 billion to build 100,000 homes over eight years for first time buyers. The Albanese government has also established the First Home Buyers Guarantee to allow first-time buyers to purchase a home with a five per cent deposit and without paying Lenders Mortgage Insurance. It follows the Reserve Bank of Australia delivering its second cash rate cut of 2025 last week, which is expected to further the turnaround in house price growth after slowing in 2024. Originally published as Labor needs to 'step up the pace' after housing approvals slump, REA Group senior economist Eleanor Creagh declares
West Australian
21-05-2025
- Business
- West Australian
Barefoot Investor: Scott Pape said young people should be ‘p**sed off' with RBA's call to cut interest rates
On Tuesday, the Reserve Bank of Australia cut 0.25 per cent off the cash rate. The new rate of 3.85 per cent is the lowest Australians have experienced since 2023. But, finance guru Scott Pape — better known as The Barefoot Investor — said young people should be 'p**sed off' with RBA's latest move. He explained that while the cut would ease mortgage repayments for millions of Australian homeowners, it would likely make it harder for young people to join the property ladder because house prices will rise in coming months. 'If I was a young person right now I would be pretty p**sed off,' Mr Pape told 'Every time a young person gets close, it just keeps getting more expensive.' He also blasted Labor's First Home Buyers Guarantee — it enables eligible home buyers to buy a home with as little as five per cent, instead of the normally required 20 per cent and it is expected to come into effect on January 1, 2026. 'It's stupid, totally stupid,' he added. 'People shouldn't be buying a home in one of the most expensive cities in the world if they can't afford it. 'I don't understand how a responsible government can stand by and say this is a good thing.' On the other hand, Michael Yardney from Metropole Property Strategists urged eager first home buyers to get in quick before the incentive kicks in and the price of entry level homes skyrockets. 'Property prices will skyrocket in early 2026 when Labor's five per cent deposit scheme comes into effect — get in before the crowd,' he said. 'Sure, prices seem expensive but that's what your parents said. Who wouldn't like to buy their parents' home for the price they paid.'
Perth Now
21-05-2025
- Business
- Perth Now
Why young people should be p**sed off with RBA rate cuts
On Tuesday, the Reserve Bank of Australia cut 0.25 per cent off the cash rate. The new rate of 3.85 per cent is the lowest Australians have experienced since 2023. But, finance guru Scott Pape — better known as The Barefoot Investor — said young people should be 'p**sed off' with RBA's latest move. He explained that while the cut would ease mortgage repayments for millions of Australian homeowners, it would likely make it harder for young people to join the property ladder because house prices will rise in coming months. 'If I was a young person right now I would be pretty p**sed off,' Mr Pape told 'Every time a young person gets close, it just keeps getting more expensive.' He also blasted Labor's First Home Buyers Guarantee — it enables eligible home buyers to buy a home with as little as five per cent, instead of the normally required 20 per cent and it is expected to come into effect on January 1, 2026. 'It's stupid, totally stupid,' he added. 'People shouldn't be buying a home in one of the most expensive cities in the world if they can't afford it. 'I don't understand how a responsible government can stand by and say this is a good thing.' On the other hand, Michael Yardney from Metropole Property Strategists urged eager first home buyers to get in quick before the incentive kicks in and the price of entry level homes skyrockets. 'Property prices will skyrocket in early 2026 when Labor's five per cent deposit scheme comes into effect — get in before the crowd,' he said. 'Sure, prices seem expensive but that's what your parents said. Who wouldn't like to buy their parents' home for the price they paid.'
Daily Telegraph
06-05-2025
- Business
- Daily Telegraph
Explainer: How Labor's housing plan will impact you
Australia's housing market is poised for significant change under a newly elected Labor administration that has placed housing affordability at the centre of its policy platform. The Albanese government's comprehensive housing package promises billions in new investment, rent and first homebuyer support, crisis accommodation, and a crackdown on foreign investment. Some experts, however remain cautious, with Labor's housing plan likely to drive property prices higher in the near term before supply-side measures can take effect. Here's a quick breakdown on how Labor plans to tackle Australia's housing crisis. 100,000 homes for first home buyers Labor has committed $10 billion to build 100,000 homes over eight years, exclusively for purchase by first home buyers and locked away from property investors. They would be built in partnership with state developers. Universal 5 per cent deposit From 2026, income limits under the First Home Buyers Guarantee will be abolished, allowing any first homebuyer to purchase a home with just a 5 per cent deposit without having to pay Lenders Mortgage Insurance. Prices on eligible properties will also be lifted and there will be no income caps or participant limit. Smaller mortgages through Help to Buy Labor's Help to Buy shared equity scheme, where the government covers up to 40 per cent of a home's cost that first home buyers can buy out at a later date, is said to be expanded later this year. Smaller mortgages mean lower repayments and homebuyers will also be able to gradually buy out the government's stake over time, Build to Rent Property developers can access tax incentives to build apartments with a portion of units rented 'affordably' below market rate. Rent relief Labor has delivered a 45 per cent increase in Commonwealth Rent Assistance – the biggest back-to-back increase in over 30 years, helping over 1 million households better manage rising rents. Social and affordable housing push Through the Housing Australia Future Fund and other programs, Labor plans to deliver 55,000 social and affordable homes (28,000 already in development). The scheme will prioritise housing for vulnerable women, children, veterans, and key workers. The aim is to cut social housing waitlists. Support for crisis accommodation Labor is investing a record $1.2b into new crisis and transitional housing-for older women, young Australians, and those escaping family violence-to provide safe, emergency shelter for the most vulnerable. Apprentice incentive payments To meet ambitious housing targets, Labor is looking to incentivise more people into trades. This mean investing $78m to fast track the qualification of 6000 tradies to help build more homes across Australia. From July 1, 2025, eligible apprentices will also receive $10,000 in incentive payments, on top of their wages, over the life of their apprenticeship to work in housing construction. Foreign investor ban From April 1, 2025 to March 31, 2027, foreign investors, including temporary residents and foreign-owned companies, cannot apply to buy an established dwelling in Australia unless an exception applies. These limited exceptions will include investments that significantly increase housing supply or support the availability of housing supply, and for the Pacific Australia Labour Mobility (PALM) scheme. So what does it all mean? Ray White chief economist Nerida Conisbee provides some further insights. Deposit scheme expansion: a double-edged sword Labor's signature policy – extending the 5 per cent deposit scheme to all first home buyers regardless of income – represents a fundamental shift in housing accessibility. Under the expanded program, approximately 80,000 Australians are expected to enter the property market annually, up from the current 50,000 who access the income-capped version. 'By removing the substantial barrier of lenders' mortgage insurance and the need for a 20 per cent deposit, the policy dramatically lowers the entry threshold to homeownership,' Ms Conisbee said. 'For the typical Sydney property, this could mean the difference between needing a $200,000 deposit and requiring just $50,000 – potentially saving years of saving time for aspiring homeowners.' However, economic fundamentals suggest the policy is likely to drive price growth in the short term, Ms Conisbee ads. 'The Productivity Commission's research on first homebuyer incentives consistently shows that measures increasing purchasing power, without commensurate supply increases, typically lead to price escalation in targeted market segments,' she said. 'With more buyers able to enter the market simultaneously and competing for the existing housing stock, upward price pressure becomes inevitable.' Supply challenges amid construction headwinds Labor's ambitious target of building 1.2 million new homes over five years, including the 100,000 dedicated first-buyer properties, also represents an unprecedented construction challenge. Australia has never achieved this volume in any five-year period, according to Ms Conisbee, who said the closest being approximately 1.1 million homes last decade – a figure achieved with significant foreign capital investment. As it stands, the current construction environment presents substantial obstacles to meeting these targets,' she said. These include building costs, which continue to outpace house price growth, making new construction increasingly uneconomical. Industry insolvencies have also exceed 1200 annually and continue to rise, while Labor productivity remains low compared to historical standards. Construction time frames, meanwhile, have extended from 6.5 months pre-pandemic to over 10 months today. 'The expanding gap between housing demand and supply – now approaching 500,000 dwellings nationwide – will also likely continue to widen before significant new stock becomes available,' Ms Conisbee said. The paradox: short-term pain for long-term gain The paradox of Labor's housing policy is that while it risks exacerbating affordability challenges in the short term through price inflation, it may ultimately create the conditions for improved affordability in the longer term. Higher property prices, while challenging for new entrants, makes it possible for developers to overcome construction barriers and bring new supply to market. As values rise, previously marginal development projects become viable, and the industry gains additional capital to expand capacity. Ms Conisbee said Labor's complementary policies – including apprentice incentives, Build to Rent tax benefits, and the Housing Australia Future Fund – aimed to address supply-side constraints gradually. 'However, these measures will take time to yield significant results, likely trailing behind the immediate demand stimulus of the deposit guarantee scheme,' she said. Outlook: prices rising to meet construction costs The fundamental economic equation that will drive housing supply recovery is straightforward: house prices need to rise sufficiently to match or exceed construction costs. One of the key challenges plaguing Australia's housing supply has been that building costs have outpaced house price growth, making it more affordable in most parts of Australia to buy an existing home than build a new one. 'As house prices accelerate under Labor's policies, they will inevitably reach levels that make new construction economically viable again,' Ms Conisbee said. 'This price-to-cost equilibrium is the essential mechanism that will stimulate developers to increase supply despite the significant headwinds facing the construction industry. :As prices rise to match construction costs, developers will respond with increased output, gradually addressing Australia's critical housing shortage and setting the foundation for more sustainable affordability in the years ahead.'
