Economists and independent voices have sharply criticised both Labor and the Coalition’s flagship housing policies, warning they will hurt the economy.
Meanwhile, Prime Minister Anthony Albanese has pitched Labor’s $10 billion housing promise as a step towards equity in home ownership at a press conference on Monday.
He effectively confirmed his policy would increase house prices when he was asked by Sky News if he wanted median house prices to drop.
“Look, historically in Australia… prices tend to rise,” Mr Albanese said.
“What we want to do is to make sure that people have accessibility for home ownership,” he said.
“What we want to do, is to take away the disincentive which is there, where people just can’t get a deposit.”
While politically expedient, both plans have been scrutinised for their potential to worsen housing affordability and inflation.
Labor has promised to invest $10 billion to build up to 100,000 homes for first home buyers and eliminate Lenders’ Mortgage Insurance for deposits as low as 5 per cent.
The Coalition has proposed tax deductibility for mortgage interest payments for first home buyers of new builds.
Veteran economist Saul Eslake dismissed both parties policies as fuelling the problem they claim to be solving.
“Today is a bad day for aspiring home buyers. Both sides of politics are proposing policies which will put upward pressure on housing prices,” he said in a statement.
“Anything which allows Australians to spend more on housing than they’d be able to otherwise, results in more expensive housing.
“Why do parties of both major political persuasions keep doing things which they know will put upward pressure on house prices and thus exacerbate the problem which they say they are trying to solve?”
Mr Eslake argued the Coalition’s policy was worse than Labor’s but neither was of any net benefit to the country.
He said about 700,000 voters gain from the policy as first home buyers. While 11 million voters suffer.
“Even the dumbest of our politicians can ‘do the math’, (as the Americans say). And they do,” he said.
His comments followed fellow economist Chris Richardson who dismissed recent campaign announcements as “Krusty the Clown policy” from both major parties.
“No matter what Labor and the Coalition say, their policies are merely reallocating shares of the pie – they’re not actually growing it,” he said.
“Losers won’t realise their losses until after the election.”
The mounting criticism came in the wake of high-profile campaign launches in Perth and Western Sydney.
Independent Senator Jacqui Lambie also dismissed the major party housing plans as lacking economic credibility.
“Oh dear you always know when there’s election on… honestly get out the popcorn,” she told Sky News, adding that neither party had addressed the availability of construction workers or greenfield land.
“If they were such great policies, wouldn’t you have been running with them and selling them six months beforehand?”
Meanwhile, shadow finance minister Jane Hume defended the Liberal’s housing package.
“At the campaign launch, not only was there a terrific vibe in the air, but there was also an enormous amount of excitement about the final piece of… housing policy,” she told Sky News.
“We want new home buyers in the market, but we also want them to build new home because this is a supply-side measure above and beyond anything else.
“We think that it’s going to turbocharge new home builds and so does industry.”
Despite the optimistic rhetoric from the major parties, voters have been urged to look beyond pre-election sweeteners.
“The winners from (policies) are obvious: your tax will be lower, your fuel will be cheaper, and first homebuyers get more money at housing,” Mr Richardson said.
“But the losers won’t realise their losses until after the election.”
The losers would be wage earners, borrowers and taxpayers, according to the expert economist.
Voting for the federal election opens April 22 ahead of the May 3 poll.
