Pre-Election First Homebuyer Promises - 5% Deposit for All Vs Deduct Mortgage Payments from Income Taxes

Gdsamp on 13/04/2025 - 12:28
Last edited 13/04/2025 - 13:08

New First Homebuyer policies to be announced as campaigns for the two majors launch today

ALP
A re-elected Albanese government would allow all Australian first home buyers to purchase with a 5 per cent deposit, avoiding lenders mortgage insurance, in an expansion of an existing scheme. The proposed expansion of an existing, income-capped program would instead be made universally available for a wider range of homes by a re-elected Albanese government.
Labor proposes to let all first home buyers purchase with 5 per cent deposit

LNP
First time buyers of newly built homes would be able to deduct mortgage payments from income taxes under a Coalition government.
In what would be a controversial but historic structural change to the nation's tax system, the policy would mean a family on average incomes would be about $11,000 a year better off — or $55,000 over five years.
Coalition to unveil plan to let first home buyers deduct mortgage payments from taxes

Comparison

Category Labor: Home Guarantee & Help to Buy Coalition: Mortgage Tax Deduction
Deposit requirement 5% deposit with no LMI (Home Guarantee) or 2% deposit with government equity (Help to Buy) No specific deposit support
Income cap No cap for Home Guarantee; $100k (single) / $160k (couple) for Help to Buy $175k (single) / $250k (couple)
Property price cap No cap under new policy (previously had location-based caps) Indirect cap – deduction applies to loans up to $650k
Eligible property type New and existing dwellings New builds only
LMI savings Yes – avoids Lenders Mortgage Insurance No – LMI still applies
Government equity Yes – government owns up to 40% (Help to Buy) No
Support type Direct: deposit guarantee, shared equity, and public construction of 100,000 homes Indirect: mortgage interest tax deduction and relaxed lending proposal
Timing of benefit Upfront – reduces deposit and mortgage size Ongoing – income tax savings over five years

Which scheme you reckon is better
Which one is more bullish for property ,

Poll Options

  • 70
    ALP - 5% Deposit for all FHB
  • 37
    LNP - Tax deduction for mortgage interest
  • 527
    BOTH WILL INCREASE HOUSE PRICES --> NET LOSS FOR FHB
Financial First Home Buyer

Comments

  • voo123 on 14/04/2025 - 16:03

    5% deposit is risky. It leaves the buyer vulnerable to defaulting on mortgage repayments. I would be concerned for borrowers on 5% deposit. It generally indicates lack of financial discipline to save over a sustained period of time. Once the interest rates go up, they go belly up and complain again. Ideally 15-20% deposit with a bit of LMI is acceptable, because some people actually need bank intervention to stop them from irresponsible lending.

    • arkie0 on 14/04/2025 - 21:24
      +1

      Plus Gov (our taxes) acts as guarantor if they fail as well

  • pufffdragon on 14/04/2025 - 16:12
    +1

    Looks like both sides want to create more debt for everyone with this.

  • danwylie on 14/04/2025 - 16:55
    +1

    I want to love an idea like politicians love the idea of subsidising demand. Getting jaded in my old age

  • BobLim on 14/04/2025 - 18:29
    +1

    As someone who's not going to be able to benefit from either of these, which one costs less for me as a taxpayer?

    • tenpercent on 14/04/2025 - 19:44
      +1

      The LNP policy is basically a tax cut for some people.
      The ALP policy spends taxpayer money.

      • BobLim on 14/04/2025 - 19:57
        +1

        Potato/potato then? Hard to tell whether the equity or the tax deductions would cost more from what I'm reading.

        Surely there's a place for a party to campaign on a platform of not spending more public money?

        • tenpercent on 14/04/2025 - 20:16
          +1

          But how do you buy votes without promising to spend money or cut taxes? /s

  • Genghiz88 on 14/04/2025 - 18:54
    +4

    Adopt Singapore style HDB. scheme.
    Make it safe, affordable, large and close to amenities and transport.
    Only citizens, cannot sell for 10 years and only to another citizen.
    etc. etc.

    • tenpercent on 14/04/2025 - 19:43

      Just read up about it. Sounds like an okay idea.
      However it would would be labelled far-right and racist by the likes of the ALP and the Greens.

      • Genghiz88 on 14/04/2025 - 19:56

        Really. it sounds like something a socialist would do.
        People who could be against the idea are property investors, real estate agents.
        Another issue would be freeing up land/re-zoning to build these multi-storey units.

        • tenpercent on 14/04/2025 - 20:17

          Only citizens, cannot sell for 10 years and only to another citizen.

          This part would get labelled far-right racist.

          You're right the rest of it sounds socialist.
          So socialism + nationalism….Nazi?

          • Genghiz88 on 15/04/2025 - 00:18

            @tenpercent: Residents and non citizens can still purchase a home in this country.
            How is giving citizens preference in an affordable housing scheme racist?
            In any case, the main discussion point is how to get affordable housing to the young generation of first home buyers.
            Whether it should include everybody living here is another topic for discussion.

            • tenpercent on 15/04/2025 - 07:21

              @Genghiz88: I don't think it's racist. I think certain political persuasions will label it racist.

    • saltypete on 15/04/2025 - 08:13
      +1

      Singapore do a lot of things OZ folk would dislike - but really work for them to have a safe, prosperous, harmonious multicultural community.
      I think they also have a more realistic view of the relationship between personal and community freedom thats we should consider.
      It would be good for us to step aside from our 'politically correct' ideas and look at them….not slavishly adopt, but look at what might work for us.

    • kaleidoscope on 16/04/2025 - 07:01

      it works for a small country like Singapore, not for huge a$$ country such as Australia. The costliest thing about all this is the huge investments required for infrastructure around housing (amenities, transportation…) which will take atleast 20-30 years.

  • Bearlion on 14/04/2025 - 19:27

    tone deaf policies, more seats to be lost by the uniparty

  • neonlight on 14/04/2025 - 20:55
    +2

    Does nothing go back to the drawing board. The high prices are because of investers, limited supply, population growth, immigration, lack of proper infrastructure to support more land expansion and work is focused at certain metropolitan areas. People are also willing to hold on properties for capital gain and refuse to even rent out. Lack of rental properties also cause rent to raise.

    None of those solutions by labour or LNP will work

    Address all those root causes would impact baby boomers, investers and other politicians therefore they will never fix it

    The property affordability is an endless spiral if you offer home owners grant the market will adjust prices to be higher which means the fund meaningless

    The only way is to make house prices drop and the only to do is supply and better infrastructure, and stop people hoarding housing as an investment and use them as AirBnB holiday houses. Make a pause on migrants and increase wages but wait there's inflation and skill shortage so what do you do!?

    It doesn't take an economist to work all this out. Also the prices of building new houses sky-rocketed after covid. So therefore building companies out of business or bankruptcy due to contacts unable to fulfil and just let go with unfinished constructions.

    It is a very dire situation. There I'll not be a solution unless policies are to eat into the old peoples built wealth around properties and investments. And we have parliament full of them including Dutton and AA themselves. Nothing will work

  • kiwimex on 14/04/2025 - 21:09
    +5

    To think these two parties are just hopeless, we are doomed if this is the best we can come out with…years of failed polices and nothing more than baseless carrots to gather votes at election time. Seriously we deserve better than these two idiots and their bandwagons

    • Brianqpr on 15/04/2025 - 08:10
      +2

      I honestly believe Labor would go for far more radical changes if it wasn't for a media that largely hates them.

      Look at Bill Shorten's very sensible proposed changes to negative gearing some years back. Defeated by a massive scare campaign on behalf of self interested parties. People fell for it and voted against something that would have been good for most. And as a bonus we got the idiot Scomo as PM.

      Labor won't touch such policies now because of what happened then. The media is controlled by the 1% and looks after their interests. Therefore Labor have to be LNP lite to get in.

  • Drakesy on 14/04/2025 - 22:07
    +2

    Both are shit

    Can we have a viable third option?
    Thanks

    • Brianqpr on 15/04/2025 - 08:11
      +1

      Clive Palmer 😄

      • Drakesy on 15/04/2025 - 09:18

        🤣

        viable

  • JKF on 14/04/2025 - 22:39
    +1

    Both policies that will benefit existing home owners by driving up prices further. We need a third option.

  • pennypacker42069 on 15/04/2025 - 03:12
    +2

    Reduce immigration and increase property tax on investment property

  • bin555 on 15/04/2025 - 06:50

    Each and every of these initiatives just drive the prices up.
    $55,000 in tax benefit would result in someone paying alreast 200,000 more in purchase price.

    How come media doesn't pick this up and there is no mention of this impact. Focus should be on lack of policies that keep the process on hold or lower it (atleast for first home buyer)?

  • Morphio25 on 15/04/2025 - 06:52
    +1

    Either way will up house prices. I wouldn't vote for LNP because their policy only allows first home buyers to deduct mortgage payments from income tax - i.e. that doesn't benefit me so therefore they don't get my vote. If they widened that policy to allow just anyone to do it I would absolutely vote for LNP.

    • Ozybargdias on 15/04/2025 - 08:18
      +3

      Free for all tax deductable mortgages would be economically catastrophic. It's hard to fathom how much this would fry the already overcooked housing market, as there'd be a direct incentive for everybody to buy as much house as possible to lower their taxable income, without the benefit of increasing the supply of rentals that arguably comes with negative gearing. The lost revenue would be in the tens, possibly hundreds, of billions - which would be paid for with borrowed money or massive cuts to services. Concerning that you think you (or anyone) would be better off under this approach.

      • Morphio25 on 15/04/2025 - 19:35

        The article says you have to live in the property…so there'd be no "buying up shit tons of properties to get rid of tax".

        • ausdday on 16/04/2025 - 10:15

          Happy to get a holiday home somewhere nice. I "promise" I will stay in there, for at least 2 weeks a year. The rest of the time maybe I will rent it out as Airbnb.

          So for this to work, the government needs to employ more people into the government sector to police this, which will increase the government spending again,

          ps: I am not picking on you. Just that the policy has too many loopholes. I do not agree with either party. History tells us every time government intervene the housing, the prices go up.

  • Ozybargdias on 15/04/2025 - 07:57
    +6

    People want more affordable housing. The trouble is, those people don't want their own houses to become more affordable.

    • Cluster on 15/04/2025 - 11:22
      +1

      They also don't want poor people living near them. The poors just reduce property prices even further.

  • saltypete on 15/04/2025 - 08:05
    +3

    Both will push prices up, but Labor is less bad. Its also part of a range of other things they are doing to get more supply, and they are doing things with State and Territory govs.
    LNP will really favor kids with access to the bank of Mum and Dad, drive prices up, and they will take ages to do any coordination with States and Territories. Its the COVID building squeeze again.
    LNP is currently producing brain farts derived from their Election advisors, if they get in, theyll spend the first 2 years trying to sort out the mess of ideas they have produced over the last 3 weeks. Even if I was LNP inclined I'd be giving them more bench time to sort themselves out……

  • bin555 on 15/04/2025 - 08:29
    +2

    Media headline should be
    "Yet another policy from both parties to drive up the prices for first home buyers"

  • SuperMid on 15/04/2025 - 09:19
    +1

    I too would like to living in a housing estate only a short 95 minute drive to the cbd.

    • Cluster on 15/04/2025 - 11:23
      +2

      It's time for people to find jobs that are not in or near the CBD. If that means inner urban areas will have severe problems attracting teachers, police, nurses, child care workers, etc, then so be it. Or all those rich inner urban people can pay more for those services to compensate.

      • SuperMid on 15/04/2025 - 20:16

        Its not just about jobs, its about entertainment. Quite a lot happens in the city, and when its such a long drive, people in the suburbs can feel alienated, especially younger couples/families.

        • tenpercent on 15/04/2025 - 20:19
          -1

          Quite a lot happens in the cit

          For example?

  • snirodha on 15/04/2025 - 09:45
    +2

    Both will increase house prices and won't help first homebuyers in the long run. Existing homeowners will benefit on this scheme.

  • [Deactivated] on 15/04/2025 - 10:28
    +1

    LNP
    This policy allows people to borrow more, prices will rise to reflect higher borrowing power as there is a shortage of homes already.

    Biggest beneficiaries are those who own a large portfolio of properties already, then people who own a single home. People who do not currently own housing will be worse off.

    ALP
    This policy brings forward purchases for first home buyers. It will increase prices at the low end of the market, rest of the market will be largely unaffected. People who do not currently own housing will be better off if they already have sufficient income. People who do not own housing and would buy in the future (example people currently in university, TAFE, high school) will be worse off as prices will rise before they have an opportunity to buy.

    Biggest beneficiaries are those who own a large portfolio of properties already, landlords compete in the same segment of the market as first home buyers and their assets will increase in price.

    Both policies increase house prices, the LNP policy significantly more so as it increases disposable income. They are not equally bad.

    The ALP policy will help a small segment of first home buyers in the very short term, the LNP policy will help the wealthy at the expense of the middle class and the poor.

    • tenpercent on 16/04/2025 - 07:24
      +1

      Biggest beneficiaries are those who own a large portfolio of properties already, then people who own a single home. People who do not currently own housing will be worse off.

      Because it is for new builds only I think the biggest beneficiaries for the LNP policy will be the big developers who get priority/exclusive access to new land releases by State governments.

    • Broseidon on 16/04/2025 - 11:49

      Entirely the opposite.

      LNP will help first time owners get into the market and manage repayments in their first 5 years.

      ALP essentially provides a nice stimmy and uptick in the market immediately.

      In your first couple of years of home owning you're literally trying to find your feet and figure how your funds will work moving forward - with all the new costs involved that you previously didn't have. In what way will this impact the market more than a quickfire cut for a whole bunch of people - allowing them to purchase properties that were previously out of price?

      • [Deactivated] on 16/04/2025 - 11:55

        The LNP proposal increases the amount of money you can put towards repayments. Depending on how banks value it, it increases the amount you can borrow.

        The ALP proposal does not increase the amount you can borrow. It will have less impact on prices.

        Both policies will "provides a nice stimmy and uptick in the market immediately."

        • Broseidon on 16/04/2025 - 12:48

          I have $100k and I can buy a house of $1 mil with my 10% deposit.

          I have $100k and now I can buy a house of $2 mil with my 5% deposit.

          I'm using nice and round numbers and ignoring exact factors of servicability, but you get my point.

          A lot, and by a lot, I mean nearly all will go for the top of what they can with this as people saw a home as a pipedream at one point, and you add this in, and they'll go for the dream house right off the bat driving house prices up quicker and more rapidly.

          • [Deactivated] on 16/04/2025 - 15:33

            @Broseidon: Thanks for the example.

            You misunderstand how loans are assessed. If you have the same income in both scenarios you will be offered the same size loan.

            You are offered a loan of 900k in both scenarios.

            If you have 100k you can buy $1m house.
            If you have 50k now you can buy a $0.95m house, before you couldn't buy.

            Alternatively, before you could only buy a 500k house with your 50k 10% deposit, even though you have the income to borrow 900k. This is not realistic, people don't buy houses at half the amount they can borrow.

            In comparison the LNP policy provides you a higher after tax income, so you will be offered a larger loan as you can service a larger mortgage repayment

            • Broseidon on 16/04/2025 - 19:20

              @[Deactivated]: I don't misunderstand at all lol. I've gone through the process.

              Like I said I was using a nice simple example, although extreme in difference, the reality is most people aren't borrowing to the tip of their capacity. So now there will be more incentive to push prices higher and put even more houses out of reach.

              LNP is a direct tackle of being able to service loans.

              You think part ownership won't drive prices up more? lol. It will literally incentivise people to just get in, and worry about the government portion down the line.

              • [Deactivated] on 16/04/2025 - 20:29

                @Broseidon: The LNP scheme directly increases the amount available to spend, it is the most inflationary.

                I could be wrong if banks don't consider the tax deduction in loan assessment since it is temporary.

                I'm not interested in getting into an argument with shifting goalposts to satisfy egos. If you want to discuss economics carry on. You insist you understand, nevertheless the example you provided wasn't correct as you didn't consider income.

                The part ownership scheme is limited to a small cohort because it genuinely intends to assist low income earners and will have the least overall impact on market prices.

                Most people are borrowing to the tip of their capacity, as they should. It is the most financially advantageous position to take in a country where housing is not only a very safe investment, but also continually increasing in price and those gains are tax free.

                • Broseidon on 17/04/2025 - 13:40
                  +1

                  @[Deactivated]: Its not about shifting goalposts. I used a very simple example - which I even admitted to.

                  Your last part highlights that all people act reasonably - which is something in economics your taught isn't the case. You also get into the point of past performance being an indication of future performance. Again, especially given the point at which housing is at, with it being the largest percentage of household/yearly income it has ever been - there will be a breaking point at some stage.

                  Repayability is the biggest thing people struggle with early on. I can say this as a homeowner and speaking to others who went through it. Its alaways a case of - I wish I had a little bit more wiggle room. The LNP one provides this.

                  Even in your example of $50k increase. It is still an immediate $50k increase lol.

                  • [Deactivated] on 17/04/2025 - 17:03

                    @Broseidon:

                    Even in your example of $50k increase. It is still an immediate $50k increase lol.

                    I don't understand what you mean by this.

                    Your last part highlights that all people act reasonably - which is something in economics your taught isn't the case

                    Economics specifically assumes people act perfectly rationally.

                    You also get into the point of past performance being an indication of future performance.

                    Whether that isn't going to the case going forward is irrelevant. That's what drives the behaviour in the market. You said yourself you are a recent home purchaser yet you believe prices will stop rising. So what does it matter what you believe? I am simply assuming the average person will act like you, you want to pick holes
                    That is inconsistent with your own actions - I would call that argument disingenuous as you don't believe it yourself.

                    The impact on demand will be driven by people who were originally waiting until they had a 100k deposit (i.e they would have bought in the next 1-2 years) bringing forward their purchases to the current year. What impact that will have on prices noone can tell you. However it does not provide people with more money to spend on housing, the impact on pricing will be less than a policy that does provide people with more money to spend.

                    I'm not defending the policy. If I had my way I would delete negative gearing and restart building government owned housing (rather than the money pit of giving low income earners rent assistance), including increasing temporary migration for construction workers to achieve it, with a target of 30% of all housing being government owned.

                    If people want to be landlords in that environment that is fine, but they won't be able to be slumlords like they are now. In a market economy people withdraw their homes from sale when prices stop rising, it's not enough to simply "encourage" more building with tax breaks for hard to do multimillion dollar property developers.

                    • Broseidon on 20/04/2025 - 22:29

                      @[Deactivated]: Economics tells you that this is all well and good - (if) people act perfrectly rationally. Which isn't the case in real life.

                      I am a not so recent home buyer, and I like many I know did not purchase to my max - so I'm simply going off what I have done, and what others are doing. No inconsistency at all.

                      The fact you think negative gearing being removed would impact pricing at this stage says it all lol.

                      • [Deactivated] on 21/04/2025 - 08:47

                        @Broseidon: Negative gearing isn't free, it costs billions in tax revenue.

  • Gongxifachai on 15/04/2025 - 10:39
    +5

    Just occurs to me, that both parties had plenty of time to make these changes but only choosing to do so just before election. I say both parties because I think their both the same tactic, notwithstanding who is in power. Disgusting.

  • JamesBingo on 15/04/2025 - 15:01
    +2

    The sheer volume of ‘economics by vibes’ on display is terrifying.

    Even scarier? We all get the same voting power.

    Godspeed, democracy!

    • Mrgreenz on 17/04/2025 - 08:44
      -1

      Oh great one… please guide us. What is your economic assessment of this policy ol mighty?

  • H3R34TH4C0MM3NTS on 16/04/2025 - 01:43
    +2

    another disastrous policy which will only inflate prices more and does nothing to increase supply. Governments need to reduce red tape , ban NIMBYism and increase supply and public housing. Why can't the government build micro-apartments for singles and childless couples with really low rents to allow these people to save more easily before they enter the market,

    • Broseidon on 16/04/2025 - 11:45
      +1

      The amount of people I speak to wanting to buy a first home and think that apartments, let alone one bedroom apartments are beneath them is staggering.

      Australia has as much of a cultural issue around methods of living as it does affordability. Apartment and small unit living is all throughout everywhere else in the world. But every couple I speak to needs 3 or 4 bedrooms for some reason here in Australia…

      • H3R34TH4C0MM3NTS on 16/04/2025 - 14:25
        +2

        Also it seems that Australians are notoriously bad at Math, The Price of the house is not just the sticker price you sign the contract on, and the price you sell is not your profit. the amount of debt load I've seen people take on is insane and they are all cool with it. 5-6K in interest a month , 60% of thier take home incomes.
        People don't understand that You never own the house, you own the risk of the house. The Value and the utility that that house brings to you is the Sticker price and more importantly PLUS the operational costs that are required for the duration that you are occupying the house. These costs include the financing servicing costs (interest) ,rates, taxes, insurance, utilities. the true costs of the house can be several times the sticker price. now if we somehow collectively took on less debt and chose cheaper imperfect houses, this would invariably flow down to every market segment and put downward pressure of house prices, but this would never happen because unfortunately the human race is not full of robotic rational thinkers.

        • Killerbala on 17/04/2025 - 09:55

          Wow found a rare person like me in this "housing crazy country"

  • kaleidoscope on 16/04/2025 - 07:08

    No real problem solving, just bandaid solutions that seem to attract potential voters and in no time will contribute to rise of housing prices because people have more affordability options 🤷‍♂️.

  • sandman20104159 on 16/04/2025 - 08:08

    even with 5% it makes no difference to me, im on my own no partner or anyone to split the cost of a house, i might be able to afford a house out 50kms away from work, but then the fuel to get to works gonna kill me so yeah thanks but no thanks for your shitty deal stupid goverment

  • lufee on 16/04/2025 - 11:35

    Both will drive house price up and making it easy investment who already own properties where FHB can't even enter the market.

  • Broseidon on 16/04/2025 - 11:43
    +1

    People are having a laugh if you think house prices will come down. There are then bigger issues, like those who just saved up, bought a place with a decent sized mortgage, and now have their house which is worth $250k less. No one is going to be happy about that.

    Accessibility into the market is what they need to focus on, and it seems they are trying to address that. The supply side, they are both making promises, but who knows.

    As far as what is better from a policy standpoint, I don't know how anyone can look at this and come away thinking Labor has the better strategy. From a support standpoint, and even policy complication standpoint, Liberals have got it far better here. Good luck finding out the issues/hassles down the line with the government owning a portion of your property. Or not your property in this case.

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