Labor has pledged to cut the cost of buying a home by up to 40 per cent for 10,000 Aussies per year.
Hailed as the “much-needed national plan to address the housing affordability crisis”, Labor’s shared-equity scheme has been widely applauded.
“Housing affordability needs to be a national priority and the opposition’s commitments are very welcome, with the need to boost housing supply the key to helping more Australians into homes,” said Property Council chief executive Ken Morrison after federal opposition Leader, Anthony Albanese, detailed Labor’s campaign centrepiece over the weekend.
Just days before the Reserve Bank (RBA) is expected to lift rates for the first time in over a decade, piling on extra pressure on households, Labor has pledged to make housing more affordable.
According to Mr Albanese, Labor intends to cut the cost of a mortgage by up to $380,000 by introducing a policy, called Help to Buy, which will help Australians buy a home with a smaller deposit, a smaller mortgage and smaller mortgage repayments.
“We have a housing crisis in Australia. It’s harder to buy a home today than ever before.
“It’s hard in our big cities. It’s also hard in the regions.
“It’s hard for first home buyers. It’s also hard for many older Australians,” Mr Albanese said.
Under Labor’s plan, home buyers would receive an equity contribution of up to 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price for an existing home. The homebuyer will, however, need to have a deposit of 2 per cent and qualify for a standard home loan with a participating lender to finance the remainder of the purchase.
Homebuyers will also avoid the need to pay Lenders Mortgage Insurance (LMI), representing an additional saving, depending on purchase location, of potentially more than $30,000.
“During the loan period the homebuyer can buy an additional stake in the home when they are able to do so,” Mr Albanese explained, noting that the homebuyer will not be required to pay rent on the stake of the home owned by the federal government.
“This scheme is not just for first home buyers, it’s for other Australians who need a helping hand as well”.
Help to Buy is intended for Australians with a taxable income of up to $90,000 for individuals and up to $120,000 for couples. Home buyers must also be Australian citizens and they cannot own or have an interest in a residential dwelling.
In Sydney and NSW regional centres, Labor intends to cap the property price at $950,000, providing a potential saving to homebuyers up to $380,000 on a new house and $285,000 on an existing house.
In Melbourne and Victorian regional centres, the property price cap of $850,000 would allow home buyers to save $340,000 on a new house and $255,000 on an existing house.
Reacting to Labor’s announcement, the Property Council’s Mr Morrison said that the fact the scheme is limited to 10,000 places a year means it is “unlikely to distort housing markets or prices”.
Mr Morrison also welcomed the opposition’s plan to create a National Housing Supply and Affordability Council and called for its role to be strengthened to ensure housing supply targets are achieved.
“We strongly welcome the proposed National Housing Supply and Affordability Council with its clear responsibility to collaborate on housing targets for each state and territory and advise on best practice solutions,” Mr Morrison said.
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Article courtesy of Nestegg