Natalie Barr:
Well, the government’s signature expansion of the Home Guarantee Scheme officially kicks in today, which allows Aussie first home buyers to purchase a property for just a 5 per cent deposit, and already there are concerns the policy will see house prices skyrocket. While Treasury modelling suggests values will only lift by 0.5 per cent over 6 years, other experts say otherwise, with the Insurance Council of Australia forecasting home values could inflate by 10 per cent in the first year alone because of the expanded scheme.
Let’s bring in Housing Minister, Clare O’Neil, and Nationals Senate leader Bridget McKenzie, good morning to both of you. Clare, how will you make sure that house prices don’t inflate because of this policy?
Clare O’Neil:
Well, what the government’s doing, Nat, is slashing the time that it will take first home buyers to get into the housing market.
As of today every single first home owner around the country will be eligible to get into their first home with just a 5 per cent deposit and our government’s backing. And really this is about reshaping those home ownership opportunities that are being faced by the younger generation of Australians.
For your kids and mine, Nat, they face really different housing opportunities than previous generations. The government wants to give a hand‑up to those young people today, and this is a really meaningful difference that it will make to get young people into home ownership.
Barr:
But you’ve got everyone basically besides Treasury saying this is going to whack prices up, so people will be at a disadvantage; you’ve got the Housing Industry Association, the Insurance Council, Canstar, you’ve got mortgage brokers, you’ve got real estate agents and just about every economist saying Treasury is wrong, prices will go up, way more than 0.5 per cent.
O’Neil:
Look, Nat, we know that the real answer to the housing affordability challenges facing our country is that we’ve got to build more homes more quickly, and our government is doing that.
Barr:
No, you’re failing on that.
O’Neil:
No.
Barr:
Prices —
O’Neil:
No, we’re not.
Barr:
— approvals slumped in August, 6 per cent, they slumped in July by 8 per cent, you are about on track to build about 190,000 and you’re supposed to be building 240 this year.
O’Neil:
Yeah, so respectfully, Nat, if we look across the year‑to‑year numbers, we’ve got housing starts – so that is new houses actually getting started – has lifted 17 per cent over the last year, we are seeing meaningful change there.
But Nat, this is a 40‑year‑old problem for the country. I’m not going to look a generation of young people in the eye and tell them that we’re not going to do anything for them until we build more homes in our country. What we need to do is build more homes more quickly —
Barr:
Yeah.
O’Neil:
— which our government is doing, and provide support to that younger generation who need it today, and that’s what we’re doing.
Barr:
Are you saying you’re on track to build 240,000 homes, which is what you need to do to reach your 1.2 million target by 2029; are you saying you’re on track to build your 240?
O’Neil:
What I’m saying is that for the first time in 70 years Australians have got a government at the Commonwealth level that is throwing absolutely everything at the housing crisis, Nat.
Barr:
That’s not a yes.
O’Neil:
What you’re seeing is our government investing $43 billion in building more homes, getting renters a better deal and getting more Australians into home ownership.
Now, is there more to be done? Absolutely. This is a 40‑year‑old problem for the country. What Australians have now is a Commonwealth government throwing everything at it and a 3‑term ahead where we will get out of bed every day —
Barr:
Yes.
O’Neil:
— to say what can we do to address the housing challenges facing our country.
Barr:
I know it’s an old problem; it’s not just your government, it’s been building for decades, but that’s still a no. I’ll go to you, Bridget, because I can hear you sighing in the background.
Bridget McKenzie:
Please.
Barr:
What would you like to say?
McKenzie:
Yeah. Look, we’ve all listened to Clare’s answers to your very good questions, Nat, but the reality is the decisions her government is making are making the houses crisis worse, not better, they’re increasing demand for housing supply by continuing their program of high immigration numbers.
They’re actually increasing the likelihood that interest rates will stay high because they’re not getting government spending under control, and the 5 per cent deposit scheme that they’re, you know, announcing today, they’ve literally lifted the cap so wealthy kids who can access the Bank of Mum and Dad will be competing now against everyday Australians for access to the home deposit scheme, and the median house price is already $857,000 across this country.
And so as you have said, Nat, rightfully, it’s only going to drive the prices of houses up, not down, and we’re seeing 36 being the age for when Australians get into their first home; this means we’re delaying having kids, settling down and all those normal things that previous generations have been able to get on with and do.
So this just isn’t an economic problem, it’s a social problem as well. And Nat, Clare’s government’s decisions are making it worse, not better.
Barr:
Yeah, it sounds good, you know, people would have voted for you for this, like they’ll only have to put – I’ve heard young people say, ‘Look, I only have to put 5 per cent down, it sounds good’. But the economics are, according to experts, you are putting – adding demand into a hot property market. Even the Reserve Bank Governor says nothing you do will have any impact on supply of houses in this country for the next 2 years at least. So something is going wrong here.
O’Neil:
Well, Nat, you said it sounds like a really good policy, that is because it is a really good policy. What we are doing here is genuinely opening up home ownership to a generation of young people who tell you, who tell me, who tell Bridget, that the biggest barrier they face is the time it takes to save a deposit. Now —
Barr:
But wait till the prices go up —
O’Neil:
— Bridget’s —
Barr:
— they’ll have to pay more.
O’Neil:
— Bridget has talked there about the fact that we’ve got a generation of young people growing up in our country who are telling us they’re delaying starting a family because they’ve got no pathway into home ownership —
McKenzie:
Stop bringing in —
O’Neil:
This is a real answer for them.
McKenzie:
— so many migrants.
O’Neil:
So I’m in Sydney today. The average young family here is saving for —
McKenzie:
It’s actually not.
O’Neil:
— 11 years before they can get into the property market. This policy will take that back to 2 to 3 years.
Now I understand that, you know, there will be people who don’t like this policy. I can tell you who does like it, people who are desperate to get into the home ownership market; we’re giving those people a lifeline, and we’re very proud to be doing it.
Barr:
How sure are you of that, because high school economics says, if you increase demand and not supply, which you are not doing enough, by all accounts, even the RBA Governor says you’re not in the next couple of years, if you increase supply, if you increase demand and not supply the prices will go up. So once those people try and buy those houses, they’ll realise that the price is higher. And they have to lift the money they have to pay.
O’Neil:
Yep. Yeah. So really respectfully, Nat, the Department of Treasury, the best economists in the country, have looked at this. That is not the finding that they’ve made. You mentioned off the top they’re saying that this will have about a half per cent change in‑house prices over a 6‑year period. What we get for that is an entire generation of young people whose housing opportunities have been reshaped.
So if you’re watching at home, if you want to get your kids into the market, if you’ve got people in your family who, amongst the very many people who are desperate to get into home ownership, this is a real pathway for them, as of today every first home buyer in the country eligible to get in with a 5 per cent deposit and our government’s backing. And I’d say to Bridget, I’m really surprised that the Coalition are not supporting this. This is particularly beneficial to young people across the region —
McKenzie:
Oh, Clare, Clare —
O’Neil:
— who are having very difficult chances getting into home ownership —
McKenzie:
Honestly, you’ve been giving them —
O’Neil:
— and we’re giving them a chance out of it, and Bridget says that she doesn’t agree. Well, I’d like to understand why.
Barr:
Okay. We’ll —
McKenzie:
Cut immigration, Clare. Our kids are competing – you’ve got Tony Burke adding another 205,000 permanent migrants in the coming year all needing somewhere to live, Clare. So you can spruik your 5 per cent deposit scheme, but the Reserve Bank Governor says you’re not going to get there. Even Treasurer Jim Chalmers admitted you’re not going to get the houses built. Inflation, sticky inflation, which was mentioned by the Reserve Bank Governor yesterday in her comments on keeping rates where they are, is a key component in driving up the cost of construction for new houses.
Barr:
Yeah.
McKenzie:
So at every measure, you’re literally making decisions that drive the price up, drive demand up whilst decreasing supply, and that is a recipe for disaster, not solution, Clare.
Barr:
Okay. Well, look, the Minister says that the Treasury’s right, it will only be a tiny per cent; everyone else is saying it will be different. So I guess we have to wait and see.
Let’s move on. The Communications Minister, Anika Wells, has defended her response to the fatal Optus triple zero disaster saying she is a new minister to the industry. Do you think this was a good thing to say, Clare, that she’s a ‘junior burger’ minister and she doesn’t know enough at the moment?
O’Neil:
Well, Nat, that’s not what she said, and Minister Wells is an incredibly competent Minister. In her last portfolio she delivered generational change to our aged care system that everyone else said wasn’t possible. Well, Minister Wells made it happen, and she’ll take that tenacity and grit with her into the communications portfolio.
Ultimately let’s not forget it’s Optus who have done the wrong thing here. This is a company making millions of dollars in profits off Australians each year. They’ve got legal obligations to provide secure support for triple zero and emergency services and they failed to do that.
Now the Minister has expressed the incandescent rage of Australians at the Optus executives. There’s a number of reviews that are taking place, and I’m sure you’re aware, legislation that will come forward that will address some of the issues here, and we’ll keep on top of this.
Barr:
Yes. And we’ve got the Opposition – we had the Opposition Leader on yesterday calling for, you know, more transparent reviews too. So thank you very much both of you for joining us. We’ll see you next week.