Policy Without Vision: How Both Major Parties Are Fueling Australia’s Housing Crisis
- Conor Keenan
- Apr 20
- 2 min read
Conor's Corner
"Leveraging the housing bubble by both major parties highlights a serious lack of thought leadership when it comes to genuinely addressing the rental crisis and housing unaffordability facing everyday Australians."
In a recent article titled "Labor hurls taxpayers into housing bubble," published on April 16, 2025, by MacroBusiness, economist Leith van Onselen critiques the Australian Labor Party's housing policies. He argues that these policies, aimed at increasing homeownership, may inadvertently exacerbate the nation's housing affordability crisis.
Overview of Labor's Housing Policies
Van Onselen highlights several key initiatives introduced by the Labor government:
Relaxation of Lending Standards: In February, Treasurer Jim Chalmers announced reforms allowing financial institutions to exclude student loan debts from mortgage serviceability calculations under certain conditions. This change could enable individuals earning $125,000 annually to borrow an additional $95,900, while those earning $75,000 might access an extra $26,800.The Guardian
Expansion of the 'Help to Buy' Scheme: Labor plans to broaden its shared equity program by increasing income caps to $100,000 for individuals and $160,000 for couples or single parents. Property price thresholds will also be adjusted to align with regional averages. The scheme offers first-time buyers up to 40% of a property's purchase price, requiring only a 2% deposit, and is limited to 10,000 participants annually.
Introduction of a Government-Backed Mortgage Guarantee: The government proposes allowing first-time buyers to purchase homes with a 5% deposit, backed by a 15% government guarantee, effectively eliminating the need for lenders' mortgage insurance.MacroBusiness
Potential Implications
Van Onselen contends that these policies may inadvertently inflate housing demand without addressing supply constraints, leading to higher property prices. He notes that, as of late 2024, Australians were allocating a record portion of their household income to mortgage repayments. Additionally, rental affordability reached a historic low, with median-income households spending 33% of their income on rent.
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