Albanese pitches to aspiring home buyers with $10 billion plan and removal of means test on deposit guarantee

Written by: Michelle Grattan, Professorial Fellow, University of Canberra

Anthony Albanese will promise a A$10 billion scheme to facilitate the building of up to 100,000 homes that would be earmarked for sale to first home buyers.

To be unveiled at Labor’s formal campaign launch in Perth on Sunday, the proposal would also give all first home buyers access to a federal government guarantee for a 5% deposit.

At present this guarantee is provided only on a means tested basis, up to an income level of $120,000 for singles and $160,000 for couples.

The government would also raise the price levels for properties to be eligible under the scheme.

With the guarantee, buyers avoid having to pay expensive lenders mortgage insurance.

The present 50,000 cap on the number of guarantees available would also be removed. The latest pledge takes the Labor government’s commitment to housing over its term to $43 billion.

Housing affordability is one of the major issues of the campaign, especially for young voters. A survey by money.com.au recently found housing affordability and rental stress were the dominant concerns for Australians under 40.

“Labor will enable every Australian to buy their first home with a 5% deposit,” the government says in a statement on its proposals. “There will be higher property price limits and no caps on places or income, in a major expansion of the existing scheme.”

The present median home price in Australia is $820,000; 5% of that is $41,000.

Under the changes, a Sydneysider and first home buyer would be able to purchase a $1 million apartment with a $50,000 deposit with their loan guaranteed by the Albanese government.“

Labor Press Release The government says the plan would cut the time people needed to save a deposit, and save them tens of thousands of dollars on lenders mortgage insurance. In its $10 billion investment, the government would partner with state developers and industry, to identify suitable projects, including the use of vacant or underused government land. States and territories would fast track land release, rezoning and planning approvals. The $10 billion would include up to $2 billion in grants and $8 billion in zero-interest loans or equity investment, primarily to states and territories. States and territories would have to match the $2 billion federal grants. The government says construction on the first projects would start in 2026-27, with buyers moving in from 2027-28. Albanese said: "I want to help young people and first home buyers achieve the dream of homeownership”. Housing minister Clare O'Neil said: “Young Australians are bearing the brunt of the housing crisis, and our government is going to step up to give them a fair go at owning their own home”.

Authors: Michelle Grattan, Professorial Fellow, University of Canberra