The finance minister, Simon Birmingham, says Australians don’t want Anthony Albanese at the table with them sharing equity in their homes after Labor announced a policy to make home ownership more affordable for low- and middle-income earners.
Birmingham told the ABC on Sunday the Morrison government’s affordable housing initiative was the preferred model.
“Our policies are working, it is helping now really lift the rates of first home ownership, it is delivering outcomes for Australians and importantly you get to own your own home,” he said.
“You don’t have Mr Albanese at the kitchen table with you owning part of your home with you.”
Albanese used his party’s campaign launch in Perth to unveil a new shared equity initiative, which would give eligible applicants a commonwealth equity contribution of up to 40% of the purchase price of a new home, and up to 30% for an existing home.
The new $329m housing initiative is the centrepiece of the official launch. If Albanese wins on 21 May, the shared equity housing policy will be implemented in addition to the Morrison government’s First Home Guarantee scheme.
In the Labor proposal, Australians with a taxable income of up to $90,000 for individuals and up to $120,000 for couples will be eligible to participate in the program which Albanese has called Help to Buy.
To qualify for help under Labor’s shared ownership scheme, 10,000 eligible homebuyers per year will have to have saved a deposit of 2% and qualify for a standard home loan with a participating lender to finance the remainder of their purchase.
The prime minister, Scott Morrison, said on Sunday that Labor was “looking to make money out of this”.
“They will have equity in your home and as … your equity goes up, they are going to keep it. They are going to keep the equity increase that is happening in your home,” Morrison said.
In response to the Labor policy commitment, which is modelled on similar initiatives in the US and the UK, Birmingham defended the Coalition’s program, which was first unveiled at their campaign launch in 2019.
“We are expanding our first homeowner guarantee to 50,000 places per annum, versus a Labor policy that is of 10,000,” the finance minister said on Sunday.
“Our policy is about ensuring that Australians get to own their own home. Labor’s policy is about the government owning parts of your home with you.”
Last week, the Australian Bureau of Statistics confirmed underlying inflation had soared to its highest in 13 years while the broader consumer price measure increased at the quickest pace since the GST was introduced in 2000.
Market analysts say the big inflation number means it is likely the Reserve Bank of Australia will lift interest rates during the election campaign – a development the Morrison government had wanted to avoid.
Given the likelihood Australia is moving into a sustained period of interest rate rises to counter inflationary pressure, experts have warned first-homebuyers to plan carefully before taking advantage of the federal government scheme.
While Labor’s housing affordability proposal is a shared equity model, the Morrison government’s scheme allows people to secure property with a 5% deposit.
The reaction to the scheme has been mixed with experts arguing elements of Labor’s policy are helpful but some aspects carry risks.
Graham Wolfe, managing director of the Housing Industry Association, said the shared equity scheme was a “sensible first step” to help people who were struggling to buy their home.
“As a small and targeted government-backed scheme it offers the chance for low- and moderate-income households to achieve their dream of homeownership,” Wolfe said.
Nerida Conisbee, the chief economist at real estate company Ray White, said Labor’s policy was similar to another tried in the UK which led to price rises “driven by cheap finance availability”.
Conisbee said the scheme would help those who could not rely on the “bank of mum and dad” to buy their first home by allowing the government to fill the role of guarantor, however, the relationship would mean restrictions on the property.
“You possibly won’t be able to sublet,” she said. “There may be restrictions on renovating. I doubt you will be able to use it as an investment property – unless you pay it off.
“When selling the property you will also need to give a proportion of the sale, equal to the proportion you initially borrowed, to the government.”
Dr Cameron Murray, a research fellow and housing expert at the University of Sydney, said the policy may help some by making it easier to access finance but would not address the underlying affordability issues.
“If you want people to have cheap housing, give them cheap housing. You can go and do all the financial tricks in the world but at the end of the day if they’ve paid that price, someone’s paying the price,” Murray said.
He said a better approach would be to revitalise public housing programs that offered discounted properties on a rent-to-buy basis, similar to schemes run in Singapore.
Experts have argued the Coalition’s First Home Guarantee scheme could be appropriate for people who plan to stay in one spot for a while and are comfortable riding out a possible property value trough, but warned that strategy could still be risky, especially in regional areas, in a climate of rising rates.
The Greens said on Sunday that Labor’s housing affordability intervention was a drop in the bucket. In a separate interview with the ABC, the party leader, Adam Bandt, said: “What we want to do is work with the next government, which will hopefully not be a Liberal government ... but they’re going to need to be pushed.
“Housing affordability is a massive issue in this country and they [Labor] come out with a policy that maybe might help 10,000 people and might in fact push up prices.”
Albanese has said the new home ownership program would address an affordability crisis by cutting the cost of a mortgage by up to $380,000 in some parts of the country.
Over time, Labor’s program is designed to deliver income for the commonwealth, as the government recovers its equity and its share of the capital gain when properties are sold.
