Australian governments gave more than $ 20 billion in tax exemptions and cash subsidies to first-time home buyers over the decade to 2021.
While aid for access to home ownership is a popular policy electorally, economists and public policy experts widely criticize these schemes as unequal and ultimately counterproductive, with each new impetus to the future. ‘assistance that makes prices beyond reach for those who lose it.
Instead, that $ 20 billion could have financed about 60,000 social housing units or 137,000 homes for first-time home buyers on a shared capital basis.
Even before increasing the economic stimulus response to the Covid-19, Australia’s annual spending on first-home buyer cash and stamp duty concessions increased from 1.2 billion from dollars to nearly $ 3 billion in the three years from 2016.
In addition, governments have introduced other schemes to increase the purchasing power of the first home buyer. These broader measures included the Housing Guarantee, a new national program to facilitate low-deposit mortgages, initially introduced by Scott Morrison in the midst of the 2019 election campaign.
First home buyer assistance programs … help assisted living homes set a new and higher price in the market
Now, after a lively debate on the issue ahead of the latest federal poll, the Albanian government plans to further expand the approach through its new Shared Capital Purchase Assistance program. For up to 10,000 moderate-income households a year, this scheme would offer a federal contribution of up to 40% of the purchase price of a home, with the government taking a stake in the property’s capital.
First home buyer assistance schemes in Australia do little to allow access to home ownership for people who would otherwise be permanently excluded. Rather, its main effect is to advance home ownership for low-income people who are already about to buy. In doing so, they help assisted households set a new higher price in the market.
This limitation ties in with the broader reality that renewed growth in home ownership cannot be achieved just by expanding first-home buyer support in the current model. Seriously tackling this broader goal requires systemic change to address the much more difficult challenge of alleviating the wider affordability of housing.
However, this goal is in tension with the dominant theme of housing ownership policy: facilitating the accumulation of wealth through asset ownership.
Some will argue that this requires a deregulation of land use planning. In our opinion, however, the key problem lies in the sacrosanct status of the main scenarios of fiscal policy and social security that encourage people with surplus money – or creditworthiness – to spend it on housing.
While this remains integrated, measures aimed at facilitating access and affordability for the first-home buyer will achieve little more than increasing the wealth of existing homeowners.
The probability of getting home ownership at age 30 has decreased substantially
When it comes to newly enhanced aid for first-time home buyers, Australia is by no means alone. As revealed in our new research, similar movements have been observed in several countries during the 2010s, such as the United Kingdom, Ireland, and Canada.
As in Australia, this reflects a growing concern about the falling, or at least stabilizing, home ownership rates observed in many advanced economies during the early 21st century, and especially since the global financial crisis.
This, in turn, could be the result of increasing home financing, its treatment as an attractive reversible asset, which has been combined with record low interest rates to push home buying out of the market. reach of a growing number of younger adult households.
In Australia, the likelihood of getting home ownership at age 30 has decreased substantially. Since the 1970s, the average age of the first home buyer has risen six years to 32, nearly doubling the number of years between adulthood and the arrival of home ownership.
At the same time, especially in Sydney, Melbourne and Perth, first home buyers are now buying fewer homes and more units, while a growing number are achieving this life goal only with the help of parental financial subsidy.
While Australian governments have recently reacted to the challenge of first home ownership policy by expanding and deepening the range of assistance programs, they have continued to focus efforts on the demand side of the housing market, it is to that is, to increase the purchasing power of consumers.
In contrast to other countries, as well as Australia’s own historical experience, little or no attention has recently been paid to supply measures to expand the development of adequate housing for this cohort.
In early post-war Australia, the rapid increase in home ownership was supported through large-scale state-commissioned housing development for low-cost sale as well. as through the issuance of government mortgages and regulatory preference for private loans to the buyer of the first home.
Today, especially in Singapore, but also in European countries such as the Netherlands and Germany, national and state governments continue to play an active role in the development of land and housing for the benefit of first home buyers.
Meanwhile, UK and Irish authorities are harnessing land use planning powers to ensure that private market developments include both affordable rental units and lower priced sales units.
These approaches are not only largely absent in Australia, but we also lack a coherent global policy framework to address the problems of the housing system.
Once again, this puts us out of step with some of the countries mentioned above that frame first-home buyer assistance measures within significant national housing strategies.