Some property analysts have criticised Coalition’s plan to underwrite home loan deposits for first-home buyers and called the scheme “ineffective.”
The political party announced that it is lowering the required home-loan deposit in line with its commitment to helping first home buyers save for a deposit more quickly. However, only 10,000 Australians will be eligible, according to a report by The New Daily.
Limiting the potential benefit to 10,000 borrowers suggests that the impact of the initiative will minute, according to Brendan Coates, Grattan Institute research fellow.
“The problem here is the policy is either too small and ineffective or it is expanded and becomes counterproductive,” he told The New Daily. “Assuming that every one of those 10,000 people would not have purchased a house otherwise, after a decade you could see home ownership become 1% higher.”
Coates said that the scheme is not addressing the core issue. “It’s trying to help first-home buyers without hurting anyone. But for first-home buyers to win, someone has to lose or prices have to fall, in which case first-home buyers are better off and existing homeowners are worse off,” he told The New Daily. “Both sides should resist calls to expand this scheme, because the larger it is, the more likely it is to turbocharge house prices.”
Most recent data from the Australian Bureau of Statistics show that there has been a drop in first-home buyers entering the market.
“The latest data shows a continuation of the decline in the number of first-home buyer loans, down 10% in March on a year ago,” Maree Kilroy, an economist at BIS Oxford Economics, told The New Daily. “The March result is the fifth consecutive monthly decline in new loans and pulled the 12 months to March 2019 down to 109,030 total loans [-1%year on year]. This means we are slightly