While subsidizing access to home ownership is an electorally popular policy, these systems are widely criticized by economists and public policy experts as unfair and ultimately counterproductive, with each new boost to assistance driving prices further out of reach for those who miss out. That $20 billion could instead have funded around 60,000 social housing units or 137,000 homes for first home buyers on an equity basis. Even before the Covid-19 economic stimulus response ramped up, Australia’s annual spending on cash payments from first-home buyers and stamp duty concessions was climbing – from $1.2 billion to almost $3 billion in the three years from 2016. In addition, governments have introduced other schemes to boost the purchasing power of first home buyers. These wider measures included the Housing Guarantee, a new national scheme to facilitate mortgages with low deposits, first unveiled by Scott Morrison in the heat of the 2019 election campaign. First Home Buyer Assistance Programs … help assisted households set a new, higher market price Now, after a lively debate on the issue in the run-up to the latest federal referendum, the Albanian government plans to further expand outreach through its new Help to Buy program. For up to 10,000 moderate-income households annually, this program will provide a federal contribution of up to 40% of the purchase price of a home, with the government taking an equity stake in the property. Australia’s first home buyer assistance programs do little to enable access to home ownership for people who would otherwise be permanently excluded. Instead, their primary effect is to promote home ownership for moderate-income people who are already close to the market. In this way, they help assisted households set a new, higher price in the market. This limitation is linked to the wider reality that renewed growth in home ownership cannot be achieved through further expansion of support for first home buyers in the current model alone. To seriously address this broader goal requires systemic change to address the much tougher challenge of facilitating broader housing affordability. However, this goal is in tension with the dominant theme of home ownership policy: to facilitate the accumulation of wealth through property ownership. Some will argue that this requires deregulation of land use planning. In our view, however, the key problem lies in the sacrosanct status of important tax and social policy arrangements that encourage people with spare cash – or creditworthiness – to spend it on housing. While this remains embedded, measures aimed at helping access and affordability for first home buyers will achieve little beyond increasing the wealth of existing home owners. The likelihood of home ownership by age 30 has decreased significantly When it comes to newly enhanced help for first home buyers, Australia is by no means alone. As revealed in our new research, similar moves have been seen during the 2010s in a number of other countries, including the UK, Ireland and Canada. As in Australia, this reflects growing concern about the falling – or at least declining – home ownership rates seen in many advanced economies in the early 21st century, and particularly after the global financial crisis. This, in turn, arguably results from the increasing financialization of housing – its treatment as an attractive investment asset – which has combined with historically low interest rates to push the housing market out of reach for increasing numbers of younger adult households. In Australia, the likelihood of home ownership by the age of 30 has fallen significantly. Since the 1970s, the average age of first-time home buyers has increased by six years to 32 – nearly doubling the number of years between adulthood and home ownership. At the same time, especially in Sydney, Melbourne and Perth, first home buyers are now buying fewer houses and more units, with increasing numbers only achieving this life goal with the help of parental financial support. While Australian governments have recently responded to the policy challenge of first home ownership by broadening and deepening the range of assistance programs, they have continued to focus efforts on the demand side of the housing market – that is, strengthening consumer purchasing power. In contrast to other countries, and to Australia’s own historical experience, little or no attention has recently been paid to supply-side measures to expand the development of housing suitable for this group. In early post-war Australia, rapidly increasing home ownership was supported through large-scale government-mandated housing development for low-cost sale, as well as through the issuance of government mortgages and regulatory preference for private borrowing by first-home buyers. Today, mainly in Singapore but also in European countries such as the Netherlands and Germany, national and state governments continue to play an active role in land and housing development for the benefit of first home buyers. Meanwhile, authorities in the UK and Ireland are using land-use planning powers to ensure that housing on the private market includes both affordable rents and lower-priced sales units. Not only are such approaches largely absent in Australia, but a coherent overarching policy framework to address housing system problems is also lacking. Again, this puts us out of step with some of the countries mentioned above, which frame help measures for first home buyers as part of major national housing strategies.
