Scott Morrison isn’t sure if his plan to help some Australians buy their first home more easily will increase house prices.
But the prime minister is confident the scheme won’t push prices lower, arguing the same wouldn’t be true if Labor’s plans to reform housing tax breaks are fulfilled.
“It’s difficult to say, it’s difficult to say,” the prime minister told reporters in western Sydney on Monday when asked whether the plan could lead to price rises.
“But I do know this: Labor’s housing tax will force the value of your home down.”
Under the new home deposit scheme, the government would offer loan guarantees for first home buyers, allowing them to buy properties with deposits of just five per cent instead of the typical 20 per cent.
The government is providing the National Housing Finance and Investment Corporation with $500 million to deliver the scheme, along with $25 million to set it up and research the housing market.
About 10,000 people are expected to benefit each year, which would have been about one in 11 new home-buyers in 2018.
Mr Morrison says that’s a current estimate and not a final figure, which will depend on how many loans lenders want to approve, stressing the scheme will be aimed at low and middle income earners.
Labor has committed to matching the scheme, blunting the prime minister’s pitch on housing affordability.
But Mr Morrison is eager for people to know that Labor wants to scrap another scheme that helps people save for their first home by withdrawing voluntary contributions to their superannuation.
“It’s fine for Bill Shorten to try and mimic us, but what he can’t mimic is our ability to implement policy, design policy and do it in a way that doesn’t increase taxes,” said in a live Facebook video.
Shadow treasurer Chris Bowen says Labor would want more details of the policy but that it would require bigger tax changes, like those the opposition is pushing, to be effective.
“I think it only frankly works if it is accompanied by broader reform, like reforming negative gearing,” he said.
There were about 110,000 new home-buyers in Australia in 2018, the highest level in nine years.
Housing industry bodies the Property Council and Master Builders have backed the proposed scheme.
Financial comparison site RateCity has urged people to be cautious about signing up to a 30-year mortgage with a thin deposit.
They say people with a five per cent deposit could end up paying more than $50,000 extra in interest than those with a 20 per cent deposit on a $500,000 purchase, based on an average interest rate of 4.31 per cent.
The plan is based on another program already operating in New Zealand.
But across the Tasman, first home-buyers must save a deposit of 10 per cent, rather than five per cent, before they are eligible to have their loan underwritten by Housing New Zealand.