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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.'
News.com.au
04-05-2025
- Business
- News.com.au
Homes to become much easier to buy
Labor's five percent deposit scheme is set to shift the housing market significantly, with young Australians keen to see the plan come to fruition, but economists worried the plan will only cause house prices to soar. After securing a convincing majority election win on Saturday, Labor must now push forward full steam ahead with the contentious housing plan or be damned to break a signature promise of the campaign. The timeline of the scheme has economists worried – with the party also yet to outline exactly where the money will come from. Labor's $43 billion Homes for Australia Plan included the building of 100,000 new houses which would be set aside for first homeowners, who will only need a five per cent deposit instead of the usual twenty. The plan also included increased rental assistance and the construction of more social housing dwellings. However, the five per cent scheme is set to be introduced in January 2026, while the 100,000 homes will be move-in-ready 'from 2027-28' according to the party. Even without potential construction delays, the gap has economists fearing the market will simply ignite over the next few years, with the median $820,000 home suddenly only needing a $41,000 deposit. The last time $41,000 could be used as a deposit for the median Aussie home was 2002, the party proudly claims. So how will it work? Under the scheme, 15 per cent of the property's value would be guaranteed by the Albanese Government. It means that with a five per cent deposit, first home buyers would be able to avoid Lenders Mortgage Insurance, which costs about $23,000 on average. There will be no income caps – or caps on home value. The party said that it will take 'further consultation with industry', however, plan to have the scheme in effect from January 1, 2026. Independent economist Saul Eslake said the scheme will inflate the property market. 'Anything that allows people to pay less for a mortgage, which this policy will do, will result in people borrowing more money and that will in turn result in pushing prices up,' Mr Eslake said. Prime Minister Anthony Albanese was questioned about the concerns from economists during the second election debate with the ABC. Mr Albanese said the government needed to boost 'both' demand and supply. 'We need to give people a fair crack, particularly young people. But we have a comprehensive $43 billion Homes for Australia plan, making sure, whether it's about increased social housing, increased private rentals or increased home ownership as well, through our Help to Buy scheme, that will all assist,' he said. 'The key, of course, is supply. And that's why only Labor is offering a plan at this election to increase supply of housing.' How many homes have already been built? There's been a lot of numbers thrown back and forth about how many homes are currently being built in line with Labor's 2027 move-in date. Last week, Education Minister Jason Clare and Labor's campaign co-spokesperson told ABC Radio about 2000 had already been built. 'There's about 28,000 that are under construction now,' he said. 'We finally got this legislation through the parliament and it's going to build the sort of homes that Australians need'.
News.com.au
01-05-2025
- Business
- News.com.au
Buyers purchasing new homes with just $10,000
Aussie home buyers have been snapping up brand new homes with just $10,000. As cost of living increases and housing affordability decreases, Aussies are looking for new and reliable ways to get into the market. Australian prop-tech platform Coposit allows buyers to put down a $10,000 deposit and pay off the rest through weekly payments as their homes are being built. An average build time takes about two years, so paying off a $75,000 deposit would cost around $625 over 104 weeks. At Grand Reve Castle Hill in Sydney, 14 buyers have made buying off the plan with Coposit work in their favour by keeping more cash in their accounts while the project was being built. Sandra Smith, 79-year-old downsizer purchased her new home before she sold her larger, existing home. Why old house doubled in value in two years 'I was interested in the apartment but I didn't have the cash ready for a whole deposit,' she said. After her husband had passed away, she had been living off their super and didn't want to withdraw such a large amount from her fund. 'It allowed me to purchase the apartment that I love and take my time with the deposit. Once I sold my house I could pay the rest of it off,' she said. Another owner-occupier, Luke St Heaps, took the coposit option as a way to hang onto his money longer. 'It allowed me to hold on to my money and earn interest, instead of earning half the interest if I paid it in full,' he said. 'I was a bit different to most people, I had the funds to pay the full deposit but wanted to capitalise on the interest I could get from it,' he said. 'There were no cons to using coposit, nothing negative about it.' The platform, founded by Sydney brothers Chris and Daniel Ferris, is already recognised by the Commonwealth Bank, NAB and other lenders as a solution to home ownership and allows buyers to pay the remainder of the deposit in interest-free instalments during the construction period – which means no Lenders Mortgage Insurance and keeps the money with the buyers, for longer. The developers pay a one off payment so it's no extra cost to the buyers. Coposit Chief Executive Officer and Co-Founder Chris Ferris, said Coposit was a win-win solution for purchasers and developers alike. 'Qualified purchasers who use Coposit often secure their property for less and make even more gains while they pay off their deposit between signing their contract and moving in,' Mr Ferris said. 'Developers who take on Coposit also benefit by securing funds which allows construction to be fast tracked, getting projects off the ground sooner.' McGrath associate director Adam Sparkes said it can also benefit buyers. 'When buying off the plan in a high-quality development, you get the best value when you purchase early, so any uplift in value by the time it's completed is an absolute bonus. The other benefit is being able to choose the best position or apartment type to suit your budget and lifestyle. 'Importantly, lenders look at Coposit users favourably, as it demonstrates a proven track record of putting aside money each week to come up with the full per cent over the off the plan period.'
The Guardian
14-04-2025
- Business
- The Guardian
Home ownership is slipping out of reach for many Australians. Will the major parties' promises make a difference?
Housing was always going to be the hot topic this election campaign. And no wonder. Home ownership is slipping out of reach for many Australians, especially the young and the poor, as house prices have risen much faster than incomes. So it was no surprise that both major parties officially launched their campaigns with new pitches to support first home buyers. But will they make a difference? And if not, what will? In an announcement that no serious economist had been calling for, the Coalition pledged to make mortgage payments tax deductible for first home buyers who purchase a newly built home. The plan would allow buyers to deduct the interest costs on the first $650,000 of their mortgage from their taxable income for the first five years after purchase, and only for individuals earning less than $175,000, and couples earning less than $250,000. Like the Coalition's existing plan to allow first home buyers to withdraw up to $50,000 from their super to buy a home, making mortgage payments tax deductible would put more money in the pockets of first home buyers. But the costs incurred in owning an asset should only be tax deductible if any capital gains are also taxed – as they are in countries that allow deductibility of mortgage repayments, such as the US – and no one is proposing taxing the family home. Which makes this policy just another first home buyers' grant by another name. Sign up for the Afternoon Update: Election 2025 email newsletter But unlike first home buyers' grants, which do raise buyers' purchasing power, it's unclear whether making mortgage interest payments tax deductible will result in banks being willing to lend more to eligible first home buyers. It's also highly regressive, subsidising 47% of high-earners' mortgage interest costs – offering a benefit of $87,000 over five years at prevailing interest rates for a primary income earner on $240,000 who deducts the interest on a $650,000 mortgage. Those on low incomes – the group most likely to be priced out of home ownership – would receive much less. For someone earning $60,000, they would receive just $23,000 in tax savings on a $250,000 mortgage. The good news is that the deduction will only be available to roughly the quarter of first home buyers who buy a newly built home, who make up less than 1 in 10 of all home buyers each year. The plan may help build some extra homes, since the value of the tax concession will be priced into the cost of new homes, which could make some marginal developments feasible at a time when construction costs have spiked. On the same day, Labor pledged to extend the First Home Guarantee scheme, which guarantees 15% of the property's value for first home buyers, allowing people to buy a home with just a 5% deposit and avoid Lenders Mortgage Insurance, which costs $23,000 for the average first home buyer. There will be no caps on the number of places (currently 50,000 each year), nor on the incomes of first home buyers (currently $125,000 for singles, and $200,000 for couples), starting from 1 July 2026. And property price limits will also be raised to average house prices in each city and region – rising from $900,000 to $1.5m in Sydney, for example. The Coalition has also promised to expand the scheme – by raising the income threshold for the scheme from $125,000 to $175,000 for singles, and from $200,000 to $250,000 for couples, with the same property price caps as Labor. The government expects that nearly 80,000 first home buyers would use the expanded scheme each year. But again, the policy is unlikely to raise the rate of home ownership, since those struggling to afford a home are already eligible for the scheme. Abolishing the income caps will bring higher-income earners into the scheme – and they are already likely to buy a home anyway without the government's support. More promising is Labor's announcement today that it would invest $10bn ($2bn in grants, $8bn in concessional loans) to partner with state developers and industry, to build up to 100,000 homes – with these homes reserved for sale only to first home buyers. Australia has not built enough housing to meet the needs of our growing population, largely because state land-use planning regimes have made it too hard to build more homes in the established suburbs of our major cities. Sharp rises in interest rates slowed housing approvals, especially for higher-density developments, as developers struggled for sufficient pre-sales to secure finance and commence construction. State-run developers can help get housing construction moving since they don't need to wait for pre-sales to start building. If all built, these 100,000 homes would be enough to reduce house prices and rents by up to 2.5%, more than offsetting the impact on house prices of expanding the First Home Guarantee Scheme. But Labor will have to work hard to avoid funding homes that state governments intend to build anyway, or saddling successful developments with requirements, like a mandated share of affordable homes offered to first home buyers at below cost, that make developments uneconomic to build. It follows the Coalition's recently announced plan to offer councils $5bn (via an unspecified mix of grants and concessional loans) to connect new homes to roads, sewerage, water, and other infrastructure around housing projects. And the government has already committed $3.5bn in incentive payments to the states if they can deliver on the National Cabinet Housing Plan to build 1.2m homes over five years. At least, unlike past elections, both major parties are competing over who can get the most homes built. That matters, because housing will only get more affordable in Australia if we build more of it. Brendan Coates is the housing and economic security program director at Grattan Institute
