Election special: Home is where the votes are

With Australia’s political parties throwing promises of cash around like lottery winners who forgot they didn’t want publicity, our national housing crisis has been one of the more significant targets for conditional largesse.

And when it comes to affordable homes, apartments are by far the most efficient way of putting roofs over heads, so this is about us, more than most.

So what are the promises being made and what are their chances of coming to fruition?

The Coalition has vowed to extend it’s first time buyers’ low mortgage deposit scheme to a further 50,000 purchasers.  More than 60,000 home buyers have already taken advantage of it.

Labor says it will continue that scheme but adds the lure of a co-ownership model that would see the government literally buy in with 40 per cent of the cost of a new home and 30 percent of the ticket price of an existing one.

The beauty of this, according to Labor, is that this would cost Australian taxpayers nothing in the long term and they might even make money out of it when the property is sold and they get their share of the rise in its value.

Cue industrial scale mud-slinging as the Prime Minister raises the spectre of the government claiming a share of your capital gains because it owns a third of your property.

Labor’s counter was that this policy is already working in other countries and some Australian states and anyway, didn’t ScoMo himself suggest something similar back in the day?

The Prime Minister’s response could be summarised as “that was then, this is now”.

Meanwhile, the Greens want to build a million new homes over the next 20 years, some for essential workers, some shared ownership like the Labor model, but most just for rent by government bodies to individuals.

Over in Cloud Cuckoo Land – where tiny minority parties get to dictate government policy – Clive Palmer’s United Australian Party is promising to keep mortgage rates below 3 per cent for three years.

Back in the real world, economists and housing experts are saying nothing short of a radical reform of taxation and an injection of serious funding into social housing will fix the joint problem of unaffordable purchases and unavailable, over-priced rentals.

“We can’t really hope to make a dent in the housing affordability crisis without hard policy choices such as reforming tax concessions that have pushed up house prices,” Professor Rachel Ong ViforJ (subs: correct) from Curtin University’s School of Accounting, Economics and Finance told The Conversation last week. “Neither party is willing to put forward such measures.”

So what does all this mean for investors, also taking the probability of rising interest rates into account?

The consensus seems to be that regardless of who wins power, apartment prices and rentals will probably stall rather than fall, but even if they do drop, they are coming off a high base to begin with. 

And if either parties’ policies do encourage more Australians into home ownership, the rental equation won’t alter much because every tenant who becomes an owner takes a potential rental property off the market.

In a mass conversion of renters into apartment owners, those living on the brink of homelessness simply become a larger proportion of a slightly smaller sector.

The investors who might be losing sleep are those who mortgaged themselves to the max to buy a regional property as a covid escape at the height of the market and whose bosses are now demanding they return to the office. 

Sea-changers, tree-changers and wannabe Airbnb hosts (Airwannabes?) might keep their eyes open for the occasional bargain as the interest screws tighten and the over-extended cut and run.

A version of this column first appeared in the Australian Financial Review.

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