Policy no quick fix with housing 'too far out of reach'

Duelling policies on housing might not solve all issues facing first homebuyers but could win votes despite some all but giving up on owning their slice of Australia. Login or signup to continue reading Hopeful homeowners would only need a five per cent deposit and houses would be built specifically for first-time buyers under Labor's plan. The coalition will let first-time buyers deduct interest payments against their taxable incomes on the first $650,000 of a mortgage on a newly built home.

The Labor and coalition plans are unlikely to win over economists but could entice some voters if the parties ensure they understand the policies before they cast their ballots. Labor's small-deposit pitch appears easier to grasp for some. "The deposit's my biggest issue," Sarah told AAP while pushing a pram.



She has been thinking about buying her first home for about five years. "We've just settled on the fact that we won't," she said. "We won't buy a house.

" Kieran Tan told AAP being able to deduct interest payments could be attractive if he earned more money. "If I was on like the highest tax bracket, that would mean more to me," he said. However, neither policy would likely solve the main issue - houses cost too much.

"It seems too far out of reach for me, especially in Sydney," renter Kyle told AAP. Tori Gibson said it had been hard watching friends stress and struggle to buy a place. "I don't think that's ever going to happen for me.

I'm waiting to get the inheritance from my parents," she said. Announcements pitched at Australia's younger generations have featured prominently in recent federal elections as prices increase and ownership decreases. Independent economist Saul Eslake said both announcements from the major parties at their official campaign launches would push prices up further.

"This is a bad day for aspiring homebuyers," he said. Mr Eslake was particularly sceptical of the coalition's proposed saving of about $12,000 with a taxable income of $120,000 under its plan. "They will take out bigger mortgages," he said.

"And so house prices will go up - as they always do." Any policy allowing Australians to spend more on housing than they otherwise would have been able to would lead to more expensive housing and fewer people entering the market, Mr Eslake said. Labor's five per cent deposits also fell into that category, although Mr Eslake said the proposal would be less of a burden on the federal budget.

Labor Housing Minister Clare O'Neil said the government needed to start delivering homes directly because the private market was struggling to supply affordable homes. "The fundamental problem we have is that the cost of building is too high and it can't be met by people who are borrowing money and buying homes," she said. Coalition campaign spokesman James Paterson headed off early criticism of his party's deduction scheme by highlighting policies aimed at boosting supply and slowing demand.

"Including immigration, because that is a driver of demand, and banning foreign investors for two years from buying Australian homes," he said. The coalition has pledged $5 billion for roads, sewerage and other infrastructure needed to support 500,000 new homes. Under its offer, buyers qualify for deductions for five years as long as they stay in the property.

Individuals earning up to $175,000 and joint applicants with combined incomes of less than $250,000 will be eligible. Australian Associated Press Daily Today's top stories curated by our news team. Also includes evening update.

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