As the Federal Election approaches on 3 May, both major parties have announced new policies to support first home buyers over the weekend.
The Australian Labor Party and the Liberal Party of Australia have each proposed different approaches to help more Australians get into the market – with Labor focused on smaller deposits and the Liberals offering tax relief for new home buyers.
Labor's Plan – Expand the First Home Guarantee Scheme and invest $10 billion to build 100,000 homes
Labor has committed to expanding the First Home Guarantee, a scheme that allows eligible first home buyers to purchase a home with as little as a 5 per cent deposit and no Lenders Mortgage Insurance (LMI).
As part of the proposed changes, Labor would:
- Remove income caps (currently $125,000 for singles, $200,000 for couples);
- Increase property price limits (currently $600,000 in Perth); and
- Remove the 50,000-place annual cap.
The Scheme operates by allowing the government to guarantee part of the buyer's loan, reducing the upfront cost of entering the market. Buyers remain fully responsible for their loan, and the scheme is available for both new and established homes.
Labor has also announced a $10 billion commitment to build 100,000 new affordable homes over eight years. These homes would be reserved for first home buyers only.
Coalition's Plan – First Home Buyer Mortgage Deductibility Scheme
The Liberal Party has proposed a new tax deduction for first home buyers purchasing newly constructed homes. Under the policy, eligible buyers could claim mortgage interest repayments as a tax deduction for the first five years of their loan.
The deduction would apply to loans up to $650,000 and be available to individuals earning up to $185,000 or couples earning up to $250,000. Buyers must live in the home for the full five-year period. A deposit would still be required – typically 20 per cent, unless the buyer qualifies for another scheme.
The Coalition has also committed to expanding the Home Guarantee Scheme. Under its plan:
- The number of places under the First Home Buyer Guarantee and Regional First Home Buyer Guarantee will be uncapped;
- The income cap for individuals will increase from $125,000 to $175,000;
- The income cap for joint applicants will increase from $200,000 to $250,000; and
The property price caps would rise - in Western Australia, the cap would increase from $600,000 to $850,000 in Perth, and from $450,000 to $600,000 in regional WA.
The Coalition has also previously proposed to allow first home buyers to access up to $50,000 from their superannuation to put toward a home deposit. This amount would need to be returned to the individual's super fund when the home is sold.
REIWA's view
REIWA President Suzanne Brown said it was encouraging to see both major parties prioritise housing in their election campaigns.
"Helping more Western Australians into their first home is an important goal, and we welcome policies that support first home buyers to enter the market," Ms Brown said.
"At the same time, we know that housing supply remains the fundamental challenge. While these announcements will assist first home buyers to get into the market, they do not alleviate the supply shortage."
Ms Brown said the WA market has previously been affected by policy change and the broader impacts needed to be considered.
"During COVID, housing grants drove a significant increase in demand, but also had unintended consequences for the building industry and the established market," she said.
"It's important that demand-side measures are balanced with policies that add to supply, otherwise we risk further increasing competition for a limited number of homes."
"We call on all political parties to put forward policies for the federal government to incentivise state governments to deliver on the National Accord's 1.2 million new homes target."
