Anthony Albanese had plenty of reasons to feel at home at the UK Labour party conference in Liverpool last weekend. Invited by Keir Starmer to deliver a major address, decades of attending party meetings in Australia clearly showed for the visiting prime minister.
Some of the policy challenges were familiar as well.
Britain’s new housing secretary, Steve Reed, addressed the massive convention centre wearing a bright red Donald Trump-style cap emblazoned with the slogan “Build, baby, build”.
Just like federal Labor’s efforts to address housing supply and affordability issues here in Australia, Reed told the conference the slow pace of home construction across the UK was hurting families and young people and needed urgent attention. His slogan was taken up by young activists, who believe the flagging political stocks of Starmer’s government could be turned around with better access to housing and well-functioning communities.
A couple of days later – having been off the plane in Sydney for a mere two hours – Albanese headed to a press conference to spruik his government’s expanded scheme to help first home buyers access a loan with a deposit of as little as 5%. Taxpayers will guarantee the loan, saving the buyer from expensive insurance attached to their mortgage from a bank.
Initially promised for 2026, Labor kicked off the uncapped scheme early, prompting a rush of applications on Wednesday.
Albanese and the housing minister, Clare O’Neil, said the expanded rules meant thousands more young Australians “can stop paying off someone else’s mortgage and start building equity in their own home”.
But while Labor’s policy might be well intentioned, the government should have listened to economists and housing experts who spoke before the federal election and avoided a plan that will push up prices and further distort the market – likely achieving the opposite of what was intended.
Here’s how the problem started.
Labor was spooked on the politics of housing in the last parliament, when then Greens spokesperson Max Chandler-Mather weaponised the issue against Albanese and the then minister Julie Collins. The firebrand first-term Greens MP forced the housing crisis and renters rights to the top of the political agenda, running rings around Labor and cheering as the minor party held up housing policies in the Senate.
So in the lead-up to the election, eager to help and be seen to be helping, both Labor and the Coalition drew up voter-friendly policies to help would-be buyers locked out of the market get a foot in the door. The Coalition plan included rules to allow first home buyers to access up to $50,000 of their superannuation savings for use in a home deposit, while Labor promised to expand the 5% deposit guarantee rules.
The rules are based on property price caps for metro and regional areas and range from $1.5m in Sydney to $500,000 in regional South Australia. Previous income limits for participation have been abolished.
Chris Richardson, a budget expert, has pointed out that median prices in Sydney for both houses and apartments rose by $9,900 in September. If that pace is maintained, annual growth will be $120,000 in the coming year.
Richardson said the policy you’d least want to see introduced in the current market is one that lets first home buyers get a loan on a 5% deposit, noting supply is the key challenge. The guarantee plan won’t make housing more affordable, Richardson argued, dubbing the plan “feelgood policy” that will do the opposite.
O’Neil and Albanese have cited Treasury advice which showed an extra 70,000 people will be eligible in the first year of the new rules, and house prices will increase by 0.5% overall nationally over six years. The effect on house sales just below the new caps will probably be greater amid a rush of potential new buyers.
Ben Phillips, an economist from the Australian National University, noted the Treasury research is being kept secret, meaning it cannot be properly scrutinised despite being part of the government’s sales job. A longtime policy watcher, Phillips noted such modelling is often “very imprecise at best”.
Peter Tulip, a former Reserve Bank official and housing expert, went a step further, bluntly stating that modelling withheld from public scrutiny probably has something wrong with it. Tulip warned boosting demand without increasing housing supply risked simply reshuffling the types of people missing out.
Another contribution came from former RBA boffin Justin Fabo, who wrote this week that lower interest rates are helping the housing market gather momentum and “ramped-up government incentives” will probably add fuel to the fire in the short term. Anticipating strong price growth to come, Fabo used Google search data to show interest in investment property acquisitions is skyrocketing.
After announcing the latest interest rates decision on Tuesday, the RBA governor, Michele Bullock, said government policies to expand housing supply would take more than two years to have any impact at all.
O’Neil is a tough and energetic saleswoman for Labor’s policies. They include changes to build-to-rent rules, the creation of the Housing Australia Future Fund, tens of thousands of new social and affordable housing properties, incentive payments for Tafe students to get into the trades and a two-year ban on foreign investors buying existing homes in Australia.
O’Neil is also pushing state and local governments to do more to speed up housing construction, including by planning necessary infrastructure for the areas new homes can be built. She is seeking to overcome nimby attitudes to higher-density developments and this week praised Sydney’s Inner West council for pushing past opposition on a rezoning plan designed to deliver 30,000 extra homes across.
Most of all, O’Neil acknowledges plainly: the main game in housing is the supply side of the equation.
Labor’s main focus should be its ambitious target to build 1.2m new homes by the end of the decade. Treasury has told the government the goal will be difficult to achieve.
There were only 189,000 new dwellings approved in the full year to August, well short of the 240,000 required to achieve the government’s target. The Housing Industry Association and Labor’s own National Housing Supply and Affordability Council expects the total built by 2029 will be below 1m.
In housing and so many other areas of public policy, feelgood solutions treat voters like mugs. Albanese and O’Neil should not pursue policies set to make the housing crisis worse. They could do a lot worse than to listen to the message of UK Labour – and to build, baby, build.