Speaking exclusively on the Savings Tip Jar podcast, Ms O'Neil said there are Australians "right across the income spectrum" experiencing "really massive pain" with housing.
"We hear from lots of young families who, a generation ago or one before that, would absolutely have owned their own home, but today in Australia are still stuck in a rent trap," the Minister said.
"A growing share of people are dropping out of the bottom of the housing market altogether."
Ms O'Neil said the issue that worries her most is the situation facing younger Australians looking to enter the housing market.
"It's not fair and we've got to work harder to make sure that you have more equality between those generations."
Is the Government doing enough?
The Home Guarantee Scheme, the first iteration of which was started by the Morrison Government in 2020, has been expanded.
Under these schemes, the Government acts as guarantor for up to 15% of eligible buyers home loans.
The idea is to allow Aussies to buy with a smaller deposit and avoid paying Lenders Mortgage Insurance (LMI).
"Since we've been in government...130,000 people have been able to get into the market with the support of the home guarantee scheme," Ms O'Neil told the podcast.
"We've expanded the number of people we can assist every year up to 50,000 and we've lifted the income and price caps so that more people can get into the scheme."
In 2023 the scheme was expanded, and now also allows people to participate not only with their spouse, but also with family members and friends.
Despite this, the Minister told the podcast only 1,600 spots were filled by people buying with friends.
In any given month there are in excess of 10,000 new home loans written to first home buyers.
How's the Housing Accord going?
Building new houses is another priority - per the Housing Accord announced in 2022 the Government intends for Australia to build 1.2 million new properties over the five years from mid 2024.
So far, residential construction levels are yet to pick up, which Ms O'Neil acknowledged.
"We are about four months into that target now, and we do need to see housing builds pick up," she told the podcast.
"Government is working so much with the states to try to lift them, trying to push for planning reform at a state level, bring more skills on line, into the construction sector, and make a range of changes effectively that will help us meet those targets."
The policy demands an average of 20,000 homes built per month over the life of the scheme; ABS building approvals data demonstrates Australia struggles to approve 15,000 homes per month, let alone build them.
Opposition's Super Home Buyer Scheme rubbished
Another proposal - this one from the other side of the political aisle - has been to allow first home buyers to dip into their superannuation to buy a home.
However, Ms O'Neil reaffirmed the current Government's opposition to this, saying this would only heighten the generational divide.
"What we don't want [young Australians] to do is something no generation has ever done before, and that is sacrifice their lifestyle and retirement to get housing," she told the podcast.
"If all young people have access to their super then all we're doing is effectively raising house prices by the amount that they can borrow.
"What we would be also doing is taking that money that those young people are saving for their retirement and largely giving it to a generation of people who already have a lot of housing wealth."
Picture by Jasper Bennett on Unsplash
Ready, Set, Buy!
Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!
With bonus Q&A sheet and Crossword!
Denise Raward
Harry O'Sullivan
Jacob Cocciolone
