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Why Labor and the Coalition's housing policies could make the crisis worse
Apr 16, 2025
Saul Eslake, an independent economist known for his insights on housing issues, shares his expertise on recent housing policy announcements by Labor and the Coalition. He argues that these measures aimed at helping first-time home buyers might inadvertently drive house prices higher. Eslake critiques the historical failures of past housing policies and discusses the political motivations behind current proposals. He also emphasizes the urgent need for effective rental policies and increasing housing supply to truly address the crisis.
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Quick takeaways
- Both Labor and Coalition's proposed housing policies aim to help first-time buyers but may inadvertently increase housing demand and prices.
- Experts recommend shifting focus from demand-inflating measures to increasing affordable housing supply for sustainable solutions to the crisis.
Deep dives
The Impact of Proposed Policies on Housing Affordability
Both major political parties in Australia have proposed new policies aimed at assisting first-time home buyers, but these measures may actually exacerbate the housing crisis. The Coalition plans to allow tax deductions on mortgage interest payments and access to superannuation savings for home deposits, which could increase demand for housing. However, such measures do not address the underlying issue of supply, and experts argue that they may lead to higher house prices rather than making homes more affordable. As a result, these proposals could contribute to a cycle of unaffordability, reinforcing the problematic trend seen in housing policies over several decades.
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