The federal budget has put rising petrol bills at the centre of its “cost of living relief” package but the cost of housing,which is a much greater burden on the family budget,has not been given such a high profile.
The22 cents a litre cut in the fuel excise in the budget will help motorists,including high-income earners with big gas-guzzling cars,but the budget offers nothing for renters or people paying off mortgages.
Treasurer Josh Frydenberg has tried to answer complaints about the lack of relief for them by pointing to the budget decision to more thandouble the size of the Home Guarantee Scheme,which started two years ago.
The scheme helps first home buyers raise the 20 per cent deposit banks prefer before offering a home loan. From this year,up to 50,000 people will be able to access the scheme under which the government offers a guarantee to the banks that cuts the up-front deposit to 5 per cent for ordinary first home buyers and just 2 per cent for 5000 single parents. There will be 10,000 places reserved for regional house buyers.
Yet in selling the expanded scheme on Wednesday,Prime Minister Scott Morrison was confronted with the fact that the scheme,even after its expansion,will do little to help other people,such as renters,meet the cost of housing. He said that “the best way to support people renting a house is to help them buy a house”.
While Mr Morrison was right to sing the praises of home ownership,his remarks sounded insensitive to the 30 per cent of Australians who rent,especially those who do not want to buy or cannot afford to.
Even among first home buyers,the expanded Home Guarantee Scheme will only help a minority. Nigel Stapledon,a research fellow at the Centre for Applied Economic Research at UNSW,says it will only cover one in three.
For everyone else looking to buy a house,the extra demand as a result of the Home Guarantee Scheme will just bump up house prices even higher.
This is well understood. The Coalition-dominated parliamentary inquiry into housing affordability and supplysaid so in its report this month:“Unless first home buyer support programs are accompanied by increased housing supply entering the market,such policies usually lead to an increase in property prices.”
Raising a deposit is certainly a major obstacle to buying a house. Currently,someone on the average income in Sydney would have to work more than eight years to raise the cash.