Just two days after its launch, Labor’s new first home buyer scheme has come under fire for allegedly driving property prices up almost overnight.
A key plank of Prime Minister Anthony Albanese’s re-election campaign, the scheme allows first home buyers to purchase with a 5% deposit instead of the traditional 20%, with the government acting as guarantor for an additional 15%. It is designed to help young Australians avoid expensive lenders’ mortgage insurance and enter the market sooner.
However, economists and opposition critics say the policy boosts demand without addressing the root cause of the housing crisis — limited supply. Greens Senator Barbara Pocock warned the program could add $55 billion to property values over the next six years. “Increasing demand without fixing supply simply means higher prices,” she said.
Independent economist Saul Eslake echoed this concern, arguing that the scheme mainly benefits buyers who could already afford a home, simply allowing them to purchase earlier. He noted that in a supply-constrained market, “greater borrowing capacity almost always translates into higher prices.”
Critics also warn the policy could expose young buyers to financial stress, as they will need to service loans covering 95% of the property’s value. Senator Pocock branded the plan “reckless and inflationary,” accusing the government of “working for property investors and banks, not for struggling first-home buyers.”
Despite the backlash, the Albanese government has defended the policy as a “fairness initiative” and vowed to complement it with measures to increase housing supply and support construction across Australia.
