Sunrise host Nat Barr has clashed with Housing Minister Clare O’Neil in a fiery interview about the impact a new initiative will have on property prices and first-time buyers.
The federal government’s expanded home guarantee scheme came into effect on Wednesday, which allows first-home buyers to buy a property with only a five per cent deposit.
A further 15 per cent will be initially be guaranteed by the government, allowing the purchaser to avoid paying expensive lenders’ mortgage insurance which is normally required for small initial deposits.
The scheme was previously restricted to 35,000 first-time buyers annually, but the number of eligible first-time home buyers able to access the scheme will be uncapped from October 1.
While the scheme was intended to help first-time buyers, critics say it burdens them with bigger mortgages and, by ushering more people into the buyers’ market, it will further push up prices due to the shortage of properties.
O’Neil copped a grilling from Barr when she appeared on the program on Wednesday alongside Nationals Senator Bridget McKenzie.
Barr rejected the minister’s assurances that the grant program won’t drive up property prices.
‘You have everyone basically, besides Treasury, who say this will whack prices up so people will be at a disadvantage,’ she told the minister.
Nat Barr clashed with Housing Minister Clare O’Neill over a first-time buyers scheme which critics say will further overheat the housing market.
More first-home buyers will be able to buy a property with only a five per cent deposit after the government’s expanded scheme came into effect on Wednesday
‘You have the Housing Industry Association, the Insurance Council, Canstar, mortgage brokers, real estate agents and just about every economist saying Treasury is wrong.
‘Prices will go up way more than 0.5 per cent!’
O’Neil downplayed fears that the property prices will soar, saying more supply was coming into the market to match the burgeoning demand brought on chiefly by record immigration levels.
‘Look Nat, we know the real answer to the housing affordability challenges facing our country is that we have got to build more homes more quickly,’ she said.
‘Our government is doing that.’
Barr interrupted to question that claim, referring to new Australian Bureau of Statistics data which showed total dwelling approvals tumbled a further 6 per cent in August.
‘You’re failing on that. Approvals slumped in August by six per cent. They slumped in July by 10 per cent,’ she told the stunned minister.
‘You are on track to build about 190,000, and you are supposed to be building 240,000 this year.’
She then asked O’Neil if the government was on track to build the required 240,000 new homes this year that would keep it on targets to reach its stated 1.2 million goal by 2029.
‘What I’m saying is for the first time in 70 years, Australians have a government at the Commonwealth level that is throwing absolutely everything at the housing crisis,’ O’Neil replied.
Clare O’Neil appeared on Sunrise to spruik the government’s expanded home guarantee scheme
Barr interrupted: ‘That’s not a yes.’
O’Neil continued: ‘What you’re seeing is our government investing $43billion in building new homes, getting renters a better deal and more getting more Australians into home ownership.
‘Is there more to be done? Absolutely.
‘This is a 40-year-old problem for the country. What Australians have now is a Commonwealth government throwing everything at it and a three year term ahead where we will get out of bed every day and say what can we do to fix the housing problem in this country.’
An exasperated McKenzie was heard sighing loudly during the fiery exchange before she got the chance to comment.
‘The decisions Clare’s government is making are making the housing crisis worse, not better,’ the senator said.
‘They are increasing demand for housing supply by continuing their program of high immigration numbers.
‘They are actually increasing the likelihood that interest rates will stay high because they are not getting government spending under control.
‘The five per cent house deposit scheme that they are announcing today, they have literally lifted the cap so that wealthy kids who can access the bank of mum and dad will be competing against everyday Australians for access to the home deposit scheme.
Many experts say that the scheme will drive up property prices
‘The median house price is already $857,000 across this country.
‘And so as you have rightfully said Nat, rightfully, it’s only going to drive the prices of houses up, not down.’
Barr continued to grill O’Neil, pointing out that experts believe prices will continue to climb as the government increases the number of buyers through immigration and this cheap deposit scheme, while supply comes in at a relative trickle.
‘Even the Reserve Bank Governor says nothing you do will have any impact on supply of housing in this country for the next two years at least,’ she continued.
‘So, something is going wrong here.’
O’Neil acknowledged that the scheme has its critics.
‘I understand there are people who don’t like the policy,’ she said.
‘The people who do like it are desperate to get into the home ownership market. We are giving them a lifeline and we’re proud to be doing that.’
