With housing affordability front and centre of the Australian consciousness, property promises have been a hot topic of debate in the lead up to the Federal election.
Both sides of the political fence are pledging to help frustrated homebuyers get a leg up on the increasingly expensive property ladder, however the Coalition is alone in offering first-time
purchasers to tap into their super.
Finder money senior editor Sarah Megginson said the property promises appeared to be fixated on one problem.
“There’s a huge focus on first-home buyers, which is great, but they’re not the only buyers in the market who we need to worry about,” Ms Megginson said.
“I think both sides have policies that seem to be quite hasty. The liberal one in particular was launched on Sunday, just six days before the election.”
She added that the superannuation-related scheme outlined by the Coalition at the weekend appeared to be counter-productive to wealth creation.
“The part about it I’m stuck on is the fact that you can take money out of your super and go and buy a property with it. But then if you sell that property you have to put the deposit back into your super with a percentage of the uplift in value – if there’s been an uplift in value. And how are they possibly going to track and manage it?
“Usually you buy your first home, maybe a one- or two-bedroom apartment, and then you upgrade over time.
“This policy is a very confusing process because if you have to give back the deposit – and part of your capital growth – are you necessarily even going to have enough money after you’ve paid real estate commission and stamp duty to even upgrade to the next one?”
Here are the property promises of both parties in a nutshell.
First Home Loan Deposit Scheme
Michael and Shariah with daughter Lily at their newly purchased property in the Glasshouse Mountains.
Scott Morrison is planning on keeping, and expanding, the popular First Home Loan Deposit Scheme now known as the Home Guarantee Scheme.
The low-deposit loan initiative allows first timers to purchase a home with a 5 per cent deposit and the government will guarantee the remaining 15 per cent.
Without the scheme, banks expect first-home buyers to provide a 20 per cent deposit, or cough up lenders mortgage insurance, which, depending on the property’s location and price can be as much as $30,000.
The Coalition’s scheme is available for single applicants with a taxable income of up to $125,000 a year and couples with a salary of up to $200,000.
Currently 10,000 places are offered, however after July 1, that total will increase to 50,000 spots.
Purchase price caps are also set to be increased in the new financial year by an average of $100,000 in each city or region.
Help to Buy program
Labor leader Anthony Albanese and his partner Jodie Haydon talk with Lydia Pulley, who is a renter struggling save to enter the housing market. Picture: Liam Kidston
Anthony Albanese has promised to assist struggling buyers (and not just first-timers) with a shared equity scheme known as the Help to Buy program.
Labor’s initiative would mean the government effectively co-purchases a property with an individual buyer, even if they have previously owned a home.
It will not apply to homebuyers, such as rentvestors, who currently own real estate they don’t live in.
Eligible buyers could put down a deposit of as little as 2 per cent and get a government contribution of up to 40 per cent towards the purchase.
Labor’s scheme would also mean buyers could avoid paying LMI and eligible candidates wouldn’t need to pay rent on the portion of the home held by the government.
Owners under the scheme would have the option of buying the additional portion of the home during the loan period or, when the property is sold, the government would take back its equity and its share of the capital gain.
Australians with a taxable income of up to $90,000 for individuals or up to $120,000 for couples can apply for Help to Buy with 10,000 available each year.
It is claimed that, in some parts of Australia, this will cut the amount people that will have to pay on their mortgage by up to $380,000 over the life of the loan.
Regional First Home Buyer Support Scheme
Labor leader Anthony Albanese and his partner Jodie Haydon. Picture: Liam Kidston
Labor’s Regional First Home Buyer Support Scheme is a promise to help up to 10,000 first-home buyers every year in regional Australia.
Their stance it that this will approximately triple the number of people in regional areas who can access a government guarantee scheme.
The initiative would provide a guarantee of up to 15 per cent for eligible first-home buyers (much like the FHLDS), so locals with a 5 per cent deposit can avoid paying LMI.
The caveat for this program is that the buy must have been living in their regional area for at least 12 months.
Super Home Buyer Scheme
Prime Minister Scott Morrison and Jenny Morrison visit a housing site where HomeBuilder recipient Sarah Logans recently built home is nearing completion. Picture: Jason Edwards
In an initiative released less than a week out from the Federal election, the Coalition introduced the Super Home Buyer Scheme, would allow first-home buyers to access as much as 40 per cent of their superannuation, up to a maximum of $50,000, to help with the purchase of their first home.
The scheme would apply to both new and existing homes with the contributed amount to be returned to their superannuation fund when the house is sold, including a share of any capital gain.
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