The government is considering expanding a policy that covers the cost of mortgage cover for first-home buyers
Prime Minister Scott Morrison is considering expanding a policy that covers the cost of mortgage insurance for first-home buyers.
Record numbers of Australians are jumping into the housing market, and banks predict prices could rise by as much as 17% this year. With the market booming, the government is considering advice by the National Housing Finance and Investment Corporation to lift thresholds for the First Home Loan Deposit scheme, according to a report by The Australian.
The NHFIC, which manages the program for up to 10,000 buyers each year, confirmed that it had given advice to Housing Minister Michael Sukkar about the application of the program but did not comment on specifics, The Australian reported.
Morrison introduced the scheme at the launch of his 2019 election campaign. Industry associations have been pushing the government to raise eligibility thresholds from their current limits of $700,000 in Sydney, $600,000 in Melbourne, $475,000 in Brisbane, $500,000 in Canberra, $400,000 in Perth and Hobart and $375,000 in Darwin.
National Australia Bank chief executive Ross McEwan told a parliamentary committee on Friday that 16% of NAB mortgages were currently going to first-home buyers, compared to just 4% in 2016. First-home buyers accounted for less than 11% of NAB’s new home loans in the first quarter of 2020, The Australian reported.
McEwan said that state governments needed to address the supply issues currently plaguing the housing market.
“I strongly support first-home buyer incentives, but we know supply is restricted and the states need to streamline approval processes for land development and residential construction,” he said. “Without decisive moves to increase housing supply, demand-side incentives will inevitably act to push up house prices further and faster.”
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Westpac chief executive Peter King also told the committee that supply problems are pushing prices upward, The Australian reported.
Federal Liberal MPs supported McEwan’s call for state governments to improve access to the market, with Liberal MP Jason Falinski telling The Australian that supply issues had become a “moral issue.”
“The federal government has moral sway. … House prices have become a moral issue for young Australians who cannot access the Australian Dream,” Falinski said. “When we bailed out the Tasmanians’ housing commission, we tied that funding to reform of the state’s approach to housing. We are in dangerous territory with state governments who love collecting stamp duty and local councils who try to win elections by saying, ‘We promise no houses will be built on your street,’ not freeing up land, for their self-interest.”