How does Labor's win affect the housing market?

author-avatar By
on May 24, 2022 Fact Checked
How does Labor's win affect the housing market?

Now that Labor's in the house, what can we expect for housing? Experts chime in on what the property market could look like in the next six to 12 months.

With housing affordability a pressing issue this election, Labor came to the table with its shared equity scheme 'Help to Buy', where the government could take up to 40% equity in the home.

In addition, proposed schemes including the Regional First Home Guarantee, Housing Australia Future Fund, and reviews on price caps for first home guarantees should come into effect. 

Arjun Paliwal, Founder and Head of Research of buyers' agency InvestorKit, provided commentary on the outlook and impact on the property market as a result of these housing promises, and how this election will impact buyers and sellers alike.

Help to Buy Scheme

Labor's proposed shared equity scheme came under some scrutiny after its proposal, particularly from former Prime Minister Scott Morrison who called it "insane" during a radio interview.

Under the scheme, buyers can jump into the property market with the Federal Government with as little as a 2% deposit, for up to a 40% equity contribution. 

There are price caps in place for capital cities and regional centres, as well as income requirements, to steer the scheme towards low to middle income households.

Mr Paliwal said that while the scheme requires some fleshing out to help people get their heads around it, there are a lot of what-ifs and it's not very simple.

"Take up will likely not be high for this reason," he said.

"There are around 10,000 places available which isn’t a huge pool of demand, and with stock levels increasing, any support is helpful."

Regional Housing Scheme, Housing Australia Future Fund

The proposed Regional First Home Guarantee is set to help 10,000 regional families buy their first homes each year.

Additionally, the $10 billion Housing Australia Future Fund should see new social and affordable housing properties built around Australia.

Mr Paliwal said the regional housing scheme and price caps are good policies that will help with housing affordability.

"We will see spikes in regional demand for this," he said.

"Similarly, with the rental market being hammered and very tight over the last few years, Labor’s plans to create 30,000 new social and affordable properties will provide positive flow-on impacts."

The future of the housing market: Big changes ahead?

Mr Paliwal also gave his take on what the property market could look like over the next six to 12 months, and whether Australians should consider buying or selling now.

"We are currently in the election period where there is commonly less activity," he said.

"Many people tend to hold off on decisions until after the election, but there isn’t anything substantial enough in Labor’s policy to say you should make a behaviour change based on this – whether that be to buy, sell or invest.

"The policies also may not come out as quickly as the government would like them to."

 Mr Paliwal said that with the election over, nothing significant has happened to make things completely boom or bust.

"Buyers and sellers don’t have any benefit to hold off on decisions they planned to make based on market conditions," he said.

"Those who were holding out for a massive change in the election, should go on with business as usual.”

Is now the time to invest in property?

James Fitzgerald, author of Bulletproof Investing, said the Australian property market is expected to bounce back despite price dips in the short term.

"Sydney and Melbourne property price growth has softened a bit lately, but I think that will soon turn around," Mr Fitzgerald said.

"These are the capital cities which attract the highest number of overseas migrants and now that the international borders have reopened, we expect to receive 200,000 new migrants every year for the next couple of years.

"I think the global pandemic has thrown a lot of people for a loop, particularly those who are self-employed, self-funded retirees, or those looking to try to invest for their future, and there’s a lot of fear and anxiety about money out there."


Advertisement

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
QLD/NSW/VIC/SA METRO & INNER REGIONAL AREAS
QLD/NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

  • $5000 Cashback. T&Cs Apply.
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 29, 2022. View disclaimer.


Image by Mohd Azrin on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

Latest Articles

author-avatar
Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree
to the Savings Privacy Policy