Brokers weigh in on major party housing policies

We asked members of the broking industry what they think of the pre-election policy pledges and if enough is being done to address the housing crisis.

Supply/demand balance

Some brokers and economists have said that political parties have focused too much on demand-side policies that could make housing affordability worse.

Speaking to The Adviser, Eventus Financial mortgage broker Alex Veljancevski said that policies do not go far enough to address affordability problems.

“In any market – whether it’s housing or bananas – when people say prices are too high, what they’re really saying is demand is too high relative to supply. So any policy that increases supply will put downward pressure on prices and make the product in question more affordable; conversely, any policy that increases demand will have the opposite impact,” he said.

“The policies proposed by the Labor, Liberal and Greens parties are, collectively, likely to increase demand relative to supply, and therefore make housing less rather than more affordable.

“If our politicians want to reduce property prices and rents, they should stop introducing policies that fuel demand and instead focus on increasing supply, by building enormous numbers of new homes.”

In contrast, co-founder of mortgage brokerage Flint Group, Redom Syed, told The Adviser that he believes “tinkering with existing schemes” – such as the Home Guarantee Schemes – will have the biggest immediate impact and can bring young Australians into the property market.

“Every housing tweak has critics – but these ones are targeted. They increase access where it matters: first-home buyers,” he said.

“Yes, they lift demand. But that’s the point – it’s targeted demand from people trying to get into the market, not investors.

“What we’re likely to see is a rebalancing – demand shifting away from investors and second-home buyers, back toward young Australians buying their first home.”

Speaking on whether parties are doing enough to address housing affordability and supply, he said: “Supply policies are slow burn – they take years. But they’ve started. What we’re seeing now are demand-side measures to bridge the gap.

“The challenge isn’t just building more homes – it’s making sure people can actually buy them. These policies help do that.”

Short-sighted approach?

But some have raised concerns that approaches across the political spectrum are too focused on the short term.

Mark Haron, executive director at major aggregation group Connective, said that policy pledges would be more effective if they took a longer-term view.

“Housing affordability remains one of the most urgent challenges facing Australians. High interest rates, housing shortages, higher material costs for construction, cost of living pressures and tighter access to finance are putting home ownership increasingly out of reach for many,” he said.

“Throughout the federal election campaign, we have seen plenty of proposals around housing, but much of the focus has been on short-term measures rather than tackling the broader economic environment that continues to put households under financial strain.”

Melissa Gielnik, founder and director at mortgage brokerage Smart Lending, agreed that while many of the party policies may support first home buyers, she said there are no easy fixes to the housing crisis.

“I think both of them [the Labor and Coalition] have come up with really workable, really attractive packages for first time buyers,” Gielnik said.

“The fact is that most young people are not going to buy their first time until they’re in their 30s. So there’s got to be ways of helping them do that at a younger age to build their wealth.”

Commenting on longer-term solutions, Gielnik said: “I think it’s going to take a decade to get the housing crisis under control. I think there is no quick fix and that’s the problem.”

‘Band-aids on a shotgun blast wound’

Commenting on specific policies, Aaron Christie-David, managing director and mortgage broker at Atelier Wealth, told The Adviser that while all moves to improve access to finance are welcomed, people shouldn’t be waiting for the policies to come into being to take action.

“I think they’re all great ideas. They’re obviously throwing political carrots out there and dangling them. So while it’s not going to appeal to everyone, it gives some people some hope,” Christie-David said.

He particularly welcomed Labor’s plan to expand the Home Guarantee Scheme by removing property and income limits.

“I’ve got issues with the [current Home Guarantee Scheme] caps because they rule some people out. Why are we putting caps for first home buyers? If they’ve got the ability to get in the market, regardless of income, give them the opportunity to get in. And give them stamp duty exemptions [as the Queensland government has done this month]…,” Christie-David said.

“First home buyers generally have a deposit challenge ... So, from my perspective, all policies that they throw out there are good at this stage. But borrowers should remember that their ideas have got to get enacted; they’ve got to get rolled out. So, I’d say to people, if you’re waiting for the government to help you, that’s a very poor strategy.

“I think when you’ve handballed your problems to the government to solve, you’re not taking responsibility in your own life ... So, don’t wait, go and buy what you can, when you can, where you can. [Brokers] should be able to find ways to help you.”

Owner partner at South Australia-based Mortgage Choice Morphett Vale, Scott Bament, also welcomed Labor’s proposed expansion of the Home Guarantee Scheme, saying that the party should also look to increase property price caps, as the Liberals have outlined.

Bament said that Labor’s plan to fast-track qualifications for 6,000 tradies also has merit but that initiatives needed to be on a larger scale.

“I would tread with caution here ... Both this policy and the incentive of $10,000 seems like band-aids on a shotgun blast wound. Short term and ineffective,” Bament said.

Commenting on the Green Party’s policies, he said: “Negative gearing restrictions will severely impact housing.

“If investors do not get the tax relief they will look to recoup these funds from their tenant, increasing rental prices, further restricting first home buyers from saving the deposit they need to get into the market impacting cost of living for a smaller sector of the population broadening the gap.

“This would also reduce incentives for developers to build new projects as the pool of purchasers is lower and therefore slow housing construction puts further demand.”

[Related: Labor commits to instant asset write-off extension if re-elected]