What Labor's landslide election victory means for housing market
Labor’s victory in the federal election seemed like a foregone conclusion, but even the most diehard party faithful must have been shocked at the size of the majority handed to Prime Minister Anthony Albanese (pictured) and crew.
As it stands, Labor has won 87 seats to the LNP’s paltry 40. Now-former LNP leader Peter Dutton humiliatingly lost his own seat of Dickson, leaving his political career in tatters.
The election was won for one simple reason. Voters cut through Dutton’s culture wars noise to vote on something they actually cared about – living standards.
Despite overseeing soaring inflation over the past few years, Labor successfully convinced the Australian public that its policies will deliver a better future for the average battler.
To recap the cornerstone policies, Labor has promised:
- 5% deposit scheme expansion: Extend the existing program to allow all first-home buyers to purchase with a 5% deposit, eliminating the need for Lenders Mortgage Insurance (LMI)
- $10 billion housing fund: Commit $10 billion to construct 100,000 new homes exclusively for first-home buyers
- National housing accord: Collaborate with states and territories to build 1.2 million homes over five years, aiming to boost housing supply
- $2 billion social housing accelerator: Deliver thousands of new social homes across Australia, with all funding to be committed by states and territories by 30 June 2025
- Shared equity scheme: Implement a ‘Help to Buy’ program allowing up to 40,000 first-home buyers to co-purchase homes with the government, reducing individual financial burdens
- $10,000 apprenticeship bonus: Offer a $10,000 cash bonus to apprentices working in residential construction to encourage workforce participation in the housing sector
- Foreign buyer restrictions: Enforce a two-year ban on non-citizens purchasing existing homes to prioritize domestic buyers
- Negative gearing: Maintain current negative gearing policies, with no planned changes
- Instant asset write-off: Labor Treasurer Jim Chalmers has recently committed to extending the write-off for another year, a policy recently described by Australian Chamber of Commerce and Industry chief executive Andrew McKellar as “underwhelming”
While there was indeed some overlap with the Coalition’s promises, Labor brought an undoubtedly stronger pro-build approach to the table, while Dutton stuck with the “immigration is the problem” script.
One thing is for sure: With an eye-wateringly huge majority, Albanese has a real opportunity to fix housing on his hands.
However, if you were hoping for house prices to come down, you might need to temper your expectations.
Albanese said as much himself to Sky News during the campaign. “Do you want the median house price to drop?” he was asked plainly and simply.
“Look,” Albanese began in his response; a sure-fire sign that a politician is about to deliver a load of word salad without actually answering the question. He continued: “Prices tend to rise. What we want to do is make sure that people have accessibility for homeownership…”
Yes, Albanese wants to build more houses, yet he doesn’t want prices to come down. It would be political suicide say so, in fairness.
Where does that leave hopeful first-home buyers? Labor has promised to make it easier to secure a deposit, with policies like the 5% deposit scheme making for a genuine step in this direction.
Though when 5% of a million-and-a-half dollars (aka the average Sydney house price) is $75,000, home ownership will remain a distant dream for many Australians.
But with little in the way of opposition, Albanese has carte blanche to make housing more accessible for all.
Time to deliver
Labor’s mandate may be signed, sealed and delivered, but as with all election pledges, there is no certainly they will be fully acted upon.
As Mark Haron, executive director of mortgage aggregator Connective, said in comments sent to MPA: “The election result reflects the urgency Australians feel around housing, but now the focus must shift from promises to delivery.
“While Labor’s proposals, including the expanded First Home Buyer Guarantee and Help to Buy scheme, offer some relief, they miss the mark in addressing deeper structural issues driving affordability and access.”
Haron also commended Labor’s $10 billion housing fund, but he warned that those homes “will not be available overnight.”
“What we need now is immediate, coordinated action to relieve the pressure facing buyers today through better access to finance, smarter planning and supply-side support,” said Haron.
“Brokers are on the front line of this challenge every day and will continue to play a role in helping borrowers navigate a tightening credit environment. The government must work hand in hand with the industry, who are advocating for practical, long-term policies that are inclusive and support both brokers and the Australians they serve.”
A missed opportunity on serviceability
Despite the generally warm reception by the broking industry to Albanese’s sweeping victory, his stance on serviceability has left a lot to be desired.
Unlike Dutton, Albanese has ignored calls from industry leaders to reduce the serviceability buffer to 2.5%. But those calls are unlikely to die down any time soon.
Peter White, managing director of the Finance Brokers Association of Australia (FBAA), congratulated the federal government on its reelection before restating his stance on serviceability.
“We… recently released data that revealed the positive impact on the Australian economy as a result of a small reduction in the mortgage serviceability assessment rate,” said White in comments sent to MPA.
“This data found that reducing the rate by 0.5 per cent would result in hundreds of thousands more Australians being able to enter the property market, and many more being able to refinance, which would ease pressure on the rental market and improve the lives of countless people.
“This is a move that costs the government nothing but will bring major results. We urge the government to direct APRA to reduce the buffer rate to 2.5 per cent immediately, as the Coalition promised to do if they had won.”
However, as with pretty much all policies floating around the political sphere these days, this will inevitably make house prices go ever higher.
