Prime Minister Anthony Albanese has expanded a scheme allowing first-home buyers to secure a mortgage with a 5% deposit, with taxpayers guaranteeing the loan. Announced just hours after his return from the UK Labour Party conference, the policy aims to help young Australians stop paying rent and start building equity. However, economists warn it could drive up house prices and worsen affordability.
The uncapped scheme, initially promised for 2026, was brought forward and launched this week, prompting a rush of applications. Housing Minister Clare O’Neil said thousands more Australians would benefit, but critics argue the policy boosts demand without addressing supply shortages. Budget expert Chris Richardson called it “feelgood policy” that will do the opposite of its intended goal, noting Sydney median prices rose by $9,900 in September alone.
The government cites Treasury modelling suggesting 70,000 extra people will be eligible in the first year, with house prices rising only 0.5% nationally over six years. However, the modelling has not been publicly released, drawing criticism from economists like Ben Phillips of the Australian National University, who called such forecasts “very imprecise at best.” Former Reserve Bank official Peter Tulip added that secret modelling likely has flaws.
The policy comes amid a broader housing crisis, with both Labor and the Coalition offering voter-friendly schemes ahead of the election. The Coalition plan allows first-home buyers to access up to $50,000 from their superannuation for a deposit. Labor’s scheme includes property price caps ranging from $1.5 million in Sydney to $500,000 in regional South Australia, with income limits abolished.
Experts argue the focus should be on Labor’s ambitious target of building 1.2 million homes, rather than measures that risk inflating prices. The UK Labour Party’s housing secretary, Steve Reed, recently urged a “Build, baby, build” approach, a sentiment echoed by housing advocates in Australia.
