The Great Australian Dream: Why Are First Homes So Out of Reach?
Owning a home, the cornerstone of the Australian dream, is becoming an increasingly distant reality for many first-time buyers. But here's where it gets controversial: Andrew Bragg, the federal opposition's housing spokesman, is breaking ranks and arguing that entry-level house prices need to come down. This bold statement directly contradicts the government's stance, with Housing Minister Clare O'Neil recently stating the government isn't aiming to lower prices.
Bragg, a Liberal senator, acknowledges the political sensitivity of this issue, admitting his colleagues often shy away from this conversation. He points to the recent surge in house prices, with October seeing the fastest growth in over two years, as evidence of a deepening affordability crisis.
And this is the part most people miss: Bragg pins part of the blame on Labor's 5% deposit scheme for first home buyers, arguing it's artificially inflating prices by increasing demand without addressing the core issue of limited housing supply. He believes the scheme is essentially 'cooking the housing market,' making it even harder for young Australians to get a foot on the ladder.
Data from Cotality supports Bragg's concerns, showing a 1.1% rise in home values in October alone, driven largely by the lower and middle market segments. While the Coalition is still formulating its housing policy, Bragg is clear: entry-level home prices need to drop, ideally by at least the rate they rose in October.
However, this proposal isn't without its complexities. While lower prices would undoubtedly improve affordability for first-time buyers, existing homeowners naturally resist any decline in the value of their biggest asset. Eliza Owen, head of research at Cotality, highlights this dilemma, suggesting that while pragmatically, recent buyers would want prices to rise, the long-term goal should be to make housing more accessible for everyone.
The government, meanwhile, defends its 5% deposit scheme, arguing it helps renters transition to homeownership. They cite Treasury advice suggesting the scheme has a minimal impact on prices, attributing the main drivers to supply constraints and interest rates. Housing Minister O'Neil acknowledges the rapid price growth but disputes the scheme's role, stating it's a long-standing issue.
Labor's argument focuses on the scheme's ability to accelerate the time it takes to save for a deposit, a point Prime Minister Anthony Albanese emphasized in parliament. He highlighted the scheme's success in helping over 1,000 people in a single electorate achieve homeownership.
The debate extends beyond policy specifics. Bragg surprisingly advocates for limiting politicians to owning only one home, citing potential conflicts of interest. This proposal, while seemingly radical, raises important questions about the role of politicians in shaping housing policy when they themselves may benefit from rising prices.
Pradeep Philip, head of Deloitte Access Economics, offers a broader perspective, arguing that addressing housing affordability requires a multi-pronged approach focusing on income growth and increasing housing supply.
The battle lines are drawn. Bragg's call for lower entry-level prices challenges the status quo and sparks a much-needed conversation about the future of housing affordability in Australia. Is he right? Should we prioritize affordability for first-time buyers, even if it means existing homeowners see their property values dip? Or is there a middle ground that balances the needs of both groups? The answers to these questions will shape the Australian dream for generations to come.
