Lots of election promises for new home buyers: but are you eligible?
Mortgage tax concessions, 5% deposits, exclusive access to affordable housing: here's what you need to know
With just 3 weeks to go until the federal election both the Liberal and Labor parties turned their attention to first home buyers over the weekend.
There's a lot to understand so let's dive into what both parties have said.
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What did the Labor party promise?
5% deposits
ALP wants to extend its first home buyer support so that all first home buyers could buy property with a 5% deposit. That's right, "all". At the moment, the First Home Guarantee has a cap on the number of borrowers that can benefit. There's also currently an income cap, which would be scrapped under the new plan.
There would still be caps on property prices, but they would be increased. For example, Sydney's property price cap would jump from $900,000 to $1.5million. Melbourne's property price cap would be $950,000, Brisbane's would be $1 million and Perth would be $850,000. There are different caps across regional areas too.
Existing criteria, like the need to live in the home, would still The changes would come into place on 1 January 2026.
Housing access
The party has also pledged a $10 billion cash injection to build 100,000 affordable houses. The affordable housing would then be exclusively available to first home buyers.
What did the Liberal party promise?
Tax deductions
The Liberal Party has announced plans to make the interest on mortgage repayments tax deductible. This would only be for first home buyers earning under $175,000 for singles and $250,000 for couples. It would only apply to the first $650,000 of the loan and it would be limited to the first 5 years of the loan.
What else do we know?
Both parties had already announced some plans as part of their budget announcements.
Labor pledged an extension to its Help to Buy scheme. This scheme also helps borrowers buy with a low deposit through a shared equity scheme. Its extension would increase the number of borrowers who can use the scheme, and increase the property price caps and income caps.
The Liberal Party has also announced its plan to ban foreign investors and temporary residents from buying existing property for 2 years.
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What are people saying?
The responses come with plenty of warnings.
Economist Saul Eslake said in a LinkedIn post on Sunday that both parties have announced policies which would push up house prices.
"Both sides of politics are proposing policies which will put upward pressure on housing prices - albeit one more than the other. There must be an election in the offing," he wrote.
Co-founder of Aussie proptech service bRight Agent, Aaron Scott, is warning borrowers who consider any 5% deposit schemes.
"There is a dangerous flip side to 5% deposit home purchases, and it's called a 95% mortgage," he said.
"Ask anyone and they'll tell you that the first decade of paying off your mortgage the toughest. This period typically takes the smallest amount of principal off your loan, meaning that you're paying a lot and not really getting ahead.
"A 95% mortgage, however you cut it, is essentially just prolonging this difficult part of the cycle."
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