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How the Federal Election will impact the Australian housing market

A guide that’ll help you navigate how the Labour and the Coalition parties will intend to support Australians intending on buying a house


As we prepare to hit the polling booths next Saturday, it may be beneficial to review how the Federal Election will impact the Australian housing market.


There’s no doubt that the current predicament of interest rate rises, and political rivalry is causing uncertainty amongst the public. Current homeowners and those interested in buying a house are unclear on what the major parties will offer in terms of finance and housing incentives.


In this guide we’re going to share an unbiased view while explaining what leading political players are set to offer current and aspiring homeowners.


Australian's are curious to learn how the markets will perform as a result of the election
Australian's are curious to learn how the markets will perform as a result of the election

Current housing climate


On the 04th of May, the Reserve Bank of Australia announced their first official cash rate rise since November 2020, to 0.35 basis points. Until recently, they maintained a significantly low cash rate of 0.10 basis points, encouraging lenders to reduce their interest rates and provide support to Australian homeowners.


In the 18 months that the cash rate remained at it’s significant low, the Australian housing market outperformed past results. Some of the notable highlights to the Australian housing market included:

  • Low interest rates; making it affordable to buy and own a home

  • A greater number of first home buyers took to the market

  • More investors took to buying an investment property, utilising the equity from the increased Australian housing prices

  • Australian housing prices increased never-before-seen levels

  • Land and building shortages occurred because of the demand for property and building incentives

  • Rental markets experienced increased price growth and record low vacancy levels

With recent increases to the cash rate, interest rates, and cost of living; many Australian households are navigating what it’ll mean for them to afford housing.


What the major political parties are set to offer


Both the ALP and LNP have established policies aimed to support people with entering the property market. However, each differ with their conditions. These parties have a similar stance in ensuring renters can consider buying a house and benefiting from the Great Australian Dream.


Labour’s proposed housing incentive


Help To Buy Scheme


For those buying a house under the LNP’s scheme, should they win the election, are expected to secure their home under what’s described as a “shared equity” program. Essentially, this means that the government would own a portion of your property. They’d finance up to 40% of the purchase of a new home and 30% for an established property.


Eligibility criteria

Labour have mentioned that this scheme isn’t just for first home buyers. It’d be for anyone wanting to enter or re-enter the Australian housing market, so long as they earn $90,000 for individuals or $120,000 for couples (per annum).


Deposit

Under this scheme, you’d only need to pay a 2% deposit.


Selling shares

Should you sell the property, the government would be entitled to their contributing share from the sale price. Furthermore, they’d incur any capital gains or losses resulting from fluctuating Australian housing prices.


Spots allocated

The Labour party have mentioned that they’d allocate 10,000 spots annually for this scheme.


Other ALP Australian housing market schemes

  • The Regional First-Home Buyer Support Scheme – will support 10,000 first-home buyers (annually) in Regional Australia. The government would cover up to 15% of a property’s purchase price with the buyer only needing to cover a 5% deposit. This scheme would cover new builds and established property.

  • The Housing Australia Future Fund – the Labour party have promised to dedicate $10 billion to constructing “30,000 new social and affordable housing properties in its first five years.”

Both the ALP and LNP are dedicated to support home buyers
Both the ALP and LNP are dedicated to support home buyers

Coalition’s proposed housing incentive


First Home Guarantee Scheme


The Coalition have proposed that their Home Guarantee scheme would benefit first home buyers. Those buying a home under the Home Guarantee scheme would have a portion of their loan covered by the government with a lower deposit. This means buyers can borrow more than they’d typically be able to.


Deposit

This scheme requires a 5% deposit from the homebuyer. The Coalition’s incentive can also be used in conjunction with other State and Territory first home buyer incentives.


Selling criteria

Unlike the ALP’s proposed scheme, the government would not own any part of your home.


Spots allocated

The current number of spots under this scheme are 10,000 (annually). Though, if re-elected, the LNP have stated that they’ll lift it to 35,000 spots each year (starting from July 2022).


Other LNP Australian housing market schemes

  • The Regional Home Guarantee Scheme – will support regional home buyers with accessing finance with a low deposit. It’s for first home buyers and buyers that haven’t owned property in five years. It can only be used for new builds, and it’ll offer 10,000 spaces, annually.

  • The Family Home Guarantee – will support 5,000 single parents, annually, to buy a home with as little as a 2% deposit with the government securing the remaining 18% deposit.

Staying up to date on the property market


As the big day nears closer, the team at REIF will be closely monitoring any news that directly impacts finance and property markets. We want to ensure that you get the most up-to-date information that’ll allow you to navigate positive effects within the market.


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