Anthony Albanese will provide help for Australians on low and middle incomes to buy houses by giving 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 Labor leader will unveil the new $329m housing initiative as the centrepiece of Labor’s official campaign launch in Perth on Sunday. If Albanese wins on 21 May, Labor’s new shared equity housing policy will be implemented in addition to the Morrison government’s First Home Guarantee scheme.
To qualify for help under the shared ownership scheme, eligible homebuyers 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.
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 Labor has called Help to Buy.
Successful applicants will need to be Australian citizens and not current homeowners. Labor says successful applicants for the scheme will also avoid the need to pay lenders mortgage insurance, which represents a saving of around $30,000.
Homebuyers under the scheme will have the option of taking additional equity in the property over the life of the home loan. They will not have to pay rent on the proportion of the house owned by the commonwealth.
The new scheme is modelled on programs that already exist in the UK and in some Australian states, including Western Australia, which has the Keystart scheme.
Over time, the program is expected to deliver income for the commonwealth as the government recovers its equity and its share of the capital gain when the properties are sold.
The new policy comes as the campaign conversation has shifted to the economy, rising cost of living pressures and home mortgage rates.
A surge in inflation over the past 12 months confirmed in the latest official figures from the Australia Bureau of Statistics has led to speculation the Reserve Bank of Australia will increase interest rates during the election campaign, creating a political headache for the Morrison government.
In a statement ahead of Sunday’s Labor campaign launch, Albanese 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.
He said Australia was in the grip of a housing crisis because of surging prices. The Labor leader noted the biggest drop in home ownership as a consequence of a lack of affordability was amongst Australians on low and modest incomes “who have been forced to give up on the great Australian dream”.
Albanese said 40 years ago, almost 60% of Australian on low and modest incomes owned their own home, but because of price trends, the percentage of homeowners in those income brackets had fallen to 28%.
He said after nine years in government, housing affordability had only gotten worse under the Morrison government.
The shadow housing minister, Jason Clare, said Labor was pursuing the policy because it is “harder to buy, harder to rent and there are more homeless Australians than ever before”.
He said the program would help Australians buy a home with a smaller deposit, a smaller mortgage and smaller mortgage repayments. “This will help a lot of Australians buy a home with a smaller mortgage that they can afford to repay, instead of renting for the rest of their lives”.
Labor is launching its campaign in Perth for the first time since 1940 as part of an attempt to pick up three Liberal-held seats in the west – Swan (on a 3.2% margin), Pearce (5.2%) and Hasluck (5.9%). The party will also attempt to sandbag the ultra-marginal seat of Cowan held by Anne Aly.
Sunday’s launch will be Albanese’s most significant campaign event since emerging from home isolation on Friday after a coronavirus infection.
Albanese hopes electoral gains in WA will be the bedrock of Labor’s pathway to victory on 21 May. On the hustings in the west on Saturday, Albanese promised $125m in new funding for 135 locally made electric buses as part of a plan to shore up onshore manufacturing.
