Communications Minister Michelle Rowland has rejected suggestions the government’s expansion of its first home buyers’ scheme will lead to a surge in housing prices.
Labor’s first home guarantee allows eligible Australian couples – previously defined as married or de facto – to receive a 15 per cent government guarantee on a loan.
The scheme meant those eligible would only have to front up about a 5 per cent deposit and would avoid paying mortgage insurance.
But under the new changes, the definition of couple has been expanded to include “any two eligible individuals” while the family home guarantee will also now include single legal guardians rather than single parents.
Ms Rowland, who is a member of the cabinet’s expenditure review committee, said the new rules reflected the reality that a growing section of society was being shut out of the housing market.
“What we are doing here with these changes is … ensuring that more people who need assistance are aware that that assistance is available and are able to access it,” Ms Rowland told Sky News Australia on Sunday.
The Communications Minister was then pressed on whether flooding the market with more government funding and increasing demand would in turn be “counterproductive” and drive prices up further.
Ms Rowland denied it would add to inflation, defending the scheme as it provided home-ownership opportunities to those who have been previously unable to enter the market.
“(It) really makes a difference to people wanting to get into the market,” she said.
“Well again these schemes have been designed so that they ensure people can actually get into the market and that’s precisely what these changes are aiming to do.”
The scheme provides 35,000 spots each year on top of 10,000 for prospective homeowners in the regions.
The family home guarantee which covers single parents offers 5,000 places each year.
The previous government massively expanded the scheme from 10,000 to 35,000 in the March 2022 budget.
It has been widely popular since its inception with 99 per cent of the spots being filled in the 2021-22 financial year, while 58 per cent of the family guarantee places were taken in the same period.
The new changes will allow friends and family members to band together to purchase their own home under the scheme rather than just Australian couples.
While the government is addressing the demand side of Australia’s housing crisis by assisting Australians getting into the market, it is also attempting to address rapidly waning supply.
Labor’s $10 billion Housing Australia Future Fund aims to build tens of thousands of affordable and social housing over the next five years.