With less than three weeks to go until the election, affordable housing is shaping up as one of, if not the, key battlegrounds between the government and the opposition.
Peter Dutton announced on Sunday the Coalition plans to introduce legislation that would allow first home buyers buying newly built homes to deduct their interest payments from their income.
This is on top of the several housing policy proposals the opposition has already made, including allowing first home buyers to dip into their super and working to reduce the serviceability buffer.
Meanwhile, Labor now intends to expand the Home Guarantee Scheme to allow all first home buyers to access it, removing income caps and the limit on how many places the Scheme has each year.
Labor also says it will put $10 billion towards building 100,000 properties over the next eight years, exclusively for first home buyers.
Read more: Labor v Coalition on Housing Policy
How 'first home buyer mortgage deduction scheme' will work
The 'first home buyer mortgage deduction scheme' would be akin to what's already available for investors.
However, it will only apply for the first five years of the mortgage and on the interest paid on the first $650,000 - although there is no cap on the loan size or property price.
Individuals earning less than $175,000 and couples earning less than $250,000 are eligible, and will continue to be eligible even if their income rises.
Participants would also need to live in the house for all five years to claim the deductions.
Mr Dutton said this proposal was part of a "message of hope" for budding first home buyers.
"I will be a Prime Minister who restores the dream of home ownership," he said at the Liberal campaign launch on Sunday.
Housing Minister Clare O'Neil said it was too early to comment in detail on this proposal, but called it policy from a "campaign on the slide".
"We have to help young people into home ownership and I'm not sure how this policy is going to assist us to do that," she said.
Housing Industry Australia Managing Director Jocelyn Martin praised Mr Dutton's latest announcements, saying it will likely increase the volume of new homes being built.
"Governments have a significant role to play in offsetting the taxes, fees and charges that are incorporated in the cost of new homes for first home buyers," she said.
"In addition to the policies announced [on Sunday], all tiers of government need to work together to bring down the cost of delivering a new home to market."
Ms Martin said might even be enough to actually achieve the lofty target of constructing 1.2 million new homes in the next five years, as per the National Housing Accord.
Home Guarantee Scheme to expand
Labor's latest housing pledge is to expand the Home Guarantee Scheme to be available for all first home buyers.
The Home Guarantee Scheme allows eligible buyers to buy with a much smaller deposit and avoid paying Lenders Mortgage Insurance (LMI) with the government effectively acting as a guarantor for the remaining portion of the requisite 20% deposit.
There are currently 50,000 spots each year across the First Home, Family Home and Regional Home Guarantee, but the government intends for this to grow to around 80,000.
The Coalition also intends to increase this scheme, lifting the income cap to $175,000 for singles and $250,000 for partners (currently $120,000 and $200,000) and significantly increase the property price cap.
Property Council Chief Executive Mike Zorbas praised plans to expand the home guarantee scheme.
"Bridging the deposit gap is a critical factor in getting more young Australians into their own homes," he said.
"With the average age of first home buyers in our capital cities approaching 40, this is an important measure."
Mr Zorbas was also enthusiastic about the $10 billion Labor plan to spend on 100,000 new homes for first home buyers.
"This kind of generational investment is a game changer for new housing supply," he said.
"We look forward to early industry involvement in the scheme design to make sure the benefits are maximised."
Picture by Breno Assis on Unsplash
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