Scott Morrison unveils election promise allowing first home buyers to purchase property with just a 5% deposit — as long as you're not earning too much

Patrick Riviere/ Getty Images.

If you were out enjoying Mother’s Day with loved ones on Sunday, you’d be forgiven for not knowing that Australia’s governing Liberal-National Coalition formally kicked off its election campaign, less than a week out from the polls.

Amid little fanfare, Prime Minister Scott Morrison addressed the party faithful in Melbourne, with no former prime ministers in attendance (perhaps in a bid to avoid any awkward photos of ousted PM Malcolm Turnbull), and made clear that his party is not about to “get into a spendathon” with Labor.

But despite setting some low expectations about fancy new promises, Morrison did unveil a new policy aimed at helping would-be first home buyers get onto the property ladder.

The First Home Loan Deposit Scheme will reduce the minimum deposit required to purchase a property from 20% to 5%, and will also see lenders’ mortgage insurance scrapped for first home buyers, which the Coalition says is equivalent to a $10,000 saving. It will also see $25 million allocated to the National Housing Finance and Investment Corporation to conduct research into housing affordability, and $1 billion spent on infrastructure projects aimed at “unlocking housing supply”.

But if you’re a wannabe home-owner about to pop the champagne or reach for the early voting forms, maybe take a few deep breaths. The scheme has a few major strings attached.

First, it will only be available to first home buyers who earn less than $125,000 annually or couples with a combined income of less than $200,000.

Second, if you’ve got your eye on your favourite ritzy apartment in Sydney or Melbourne, you’re likely to be disappointed, with the policy documents making a somewhat cryptic suggestion that property values may be capped under the scheme.

“The value of homes that can be purchased under the scheme will be determined on a regional basis, reflecting the different property markets across Australia,” a statement on the Liberal Party’s website said.

Third, the scheme will be open to 10,000 borrowers per year, even though the party’s own policy documents explain that 110,000 Australians bought their first home in 2018.

Labor moved quickly to match the policy, refusing to cede ground in a tight election campaign. But it also said its own policy to scrap negative gearing (which the Coalition opposes) would be a huge benefit to first home buyers.

“We back genuine support for first home buyers – that’s why we are also reforming negative gearing for future purchases, so young Australians don’t have to keeping losing out to wealthy property speculators,” shadow treasurer Chris Bowen said in an statement.

The construction industry has warmly welcomed the Coalition’s policy, with Master Builders Australia CEO Denita Warn saying in an emailed statement it would be a “boost for both first home buyers and residential builders who are worried about the declining housing market”.

But in an environment of tightening lending conditions in the wake of the banking royal commission, some have also questioned whether a scheme allowing smaller deposits is sound economic policy, and whether younger Australians should even be encouraged into the property market in the current climate.

While the policy will likely grab the attention of many young Australians struggling to purchase a home, it turns out there weren’t too many in attendance to hear the announcement in person.

Veteran political photographer Mike Bowers captured this snap of a pretty sparse Melbourne Convention Centre.

But perhaps it says more about the collective love for Aussie mums, than it does about the state of the election race.

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