{"id":184210,"date":"2025-10-02T04:35:14","date_gmt":"2025-10-02T04:35:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/184210\/"},"modified":"2025-10-02T04:35:14","modified_gmt":"2025-10-02T04:35:14","slug":"unsw-professor-warns-anthony-albaneses-expanded-housing-guarantee-risks-setting-up-first-home-buyers-for-financial-distress","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/184210\/","title":{"rendered":"UNSW professor warns Anthony Albanese\u2019s expanded housing guarantee risks setting up first home buyers for financial distress"},"content":{"rendered":"

Anthony Albanese\u2019s move to expand the government\u2019s Home Guarantee Scheme has come under heavy fire from one of Australia\u2019s most prominent economists, who warns the policy risks pushing housing prices higher and leaving new buyers exposed.\u00a0<\/p>\n

Professor Gigi Foster from the University of New South Wales\u2019 School of Economics told Sky News host Chris Kenny the scheme may help people into the market but is ultimately \u201ca band aid solution\u201d.\u00a0<\/p>\n

\u201cIt really is a band aid solution, and I don\u2019t like the idea of getting the government involved in guarantees for basically low-down payment loans\u00a0– that\u2019s setting people up for financial difficulties later on down the track,\u201d Professor Foster said.\u00a0<\/p>\n

The expanded scheme allows first home buyers to enter the market with just a five\u00a0per cent deposit, with the federal government acting as guarantor to avoid lenders\u2019 mortgage insurance. \u00a0<\/p>\n

In Sydney, buyers can now purchase properties worth up to $1.5 million under the program.\u00a0<\/p>\n

Mr Albanese defended the policy, insisting it would have only a \u201cminimal impact\u201d on prices, with Treasury modelling suggesting a 0.5 per cent rise over six years. \u00a0<\/p>\n

\"\u2018It\u2019s<\/p>\n

But experts remain skeptical, warning that in a red-hot market with tight supply, the extra demand will inevitably drive prices higher.\u00a0<\/p>\n

Property research firm Cotality said national home values climbed 0.8 per cent in September alone – the strongest monthly rise in almost two years. \u00a0<\/p>\n

Analysts warn the combination of record-low deposits and interest rate cuts is already turbocharging borrowing capacity and fuelling demand.\u00a0<\/p>\n

\"Labor\u2019s<\/p>\n

Professor Foster cautioned the government should be looking at structural reforms rather than fuelling the cycle of demand.\u00a0<\/p>\n

\u201cThere are ways to more creatively help first home buyers or help young people for example,\u201d she explained.\u00a0<\/p>\n

\u201cYou know you could talk to the banks who, by the way, bring in 15 per cent profit every year and say, \u2018why don\u2019t you give preferential interest rates to those young people or to the first home buyers – give them an actual advantage in the market\u2019. \u00a0<\/p>\n

\"Economists<\/p>\n

\u201cBe a little more courageous about it and that\u2019s not going to influence prices directly, if at all.\u201d\u00a0<\/p>\n

She also argued governments should be looking at freeing up supply, including by giving incentives to older Australians to downsize.\u00a0<\/p>\n

\u201cYou can also work on things like capacity utilisation and incentives for older families, empty nesters, to downsize in ways that suit their preferences and needs. To open up more housing for the young families,\u201d she said.\u00a0<\/p>\n

\u201cSo, I think there are a lot of other ways you could do it. This is just the easiest, it has been done before, and I think longer term it can set people up for financial distress.\u201d\u00a0<\/p>\n

Beyond housing, Professor Foster said the broader cost-of-living squeeze was continuing to punish ordinary Australians. \u00a0<\/p>\n

With inflation still running high and electricity rebates ending, she warned the most vulnerable were being hit hardest.\u00a0<\/p>\n

\u201cThere are\u00a0of course lower income people . . .\u00a0I mean as usual it\u2019s the most disadvantaged who feels the pinch the worst when there are economic distress signals,\u201d she said.\u00a0<\/p>\n

She pointed to mixed signals in the economy that the Reserve Bank will be weighing carefully.\u00a0<\/p>\n

\u201cYou do see a kind of softening, very slight softening in the labour market,\u201d she said.\u00a0<\/p>\n

\u201cRecruitment difficulties that are reported by employers have gone down and down so we\u2019re now kind of at pre-pandemic levels of difficulty finding workers. So, we\u2019re no longer in this really hot labour market that we were. \u00a0<\/p>\n

\u201cSo (the RBA) will be looking at that as well and at the inflation figures which, as you know, were up because of the cessation of some of these electricity rebates.\u201d\u00a0<\/p>\n

With property prices surging, borrowing costs still elevated and power bills rising again, the warning from Professor Foster is stark: without deeper reforms, Australians may soon find themselves paying more for less, with little relief in sight.<\/p>\n","protected":false},"excerpt":{"rendered":"Anthony Albanese\u2019s move to expand the government\u2019s Home Guarantee Scheme has come under heavy fire from one of…\n","protected":false},"author":2,"featured_media":184211,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[2324,64,63,99,164,117823,91109,7688,117822,2961],"class_list":{"0":"post-184210","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-anthony-albanese","9":"tag-au","10":"tag-australia","11":"tag-business","12":"tag-economy","13":"tag-gigi-foster","14":"tag-home-guarantee-scheme","15":"tag-housing","16":"tag-housing-scheme","17":"tag-rising-prices"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/184210","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=184210"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/184210\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/184211"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=184210"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=184210"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=184210"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}