Greens leader Richard Di Natale has slammed the Liberals newly announced Housing Affordability scheme.
The Greens leader was equally critical of Labor’s pledge to match the plan, stating that the scheme would likely entice first home buyers to enter into the sort of debt spiral that triggered the global financial crisis.
Last Sunday, Prime Minister Scott Morrison announced at the Coalition’s campaign launch his party’s plan to allow first-home buyers to enter the property market with just a 5% house deposit.
The plan would see couples earning less than $200,000, and individuals earning less than $125,000, given the chance to enter the property market with the government guaranteeing the remainder of the 20% deposit.
Under the plan, the National Housing Finance and Investment Corporation would step in to guarantee the money, in a similar situation to those buyers who are given guarantees from their parents.
Within hours of the scheme being announced, Labor pledged to match the plan.
“We do have serious concerns about this policy. We’ve just had a royal commission into the banking and finance sector… and what we saw was a long history of unscrupulous and unsustainable lending practices from the banks,” Senator Di Natale said on Q&A last Monday night.
“The global financial crisis was triggered because people were trapped in a debt spiral, they were given incentives to enter into loans that they couldn’t afford.
“It’s not a sensible idea, it’s been panned by a range of economists, and I’m disappointed that Labor backed it in.”
Critics of the scheme include Scott Pape, best-selling author of The Barefoot Investor. In his weekly email thread, Pape warned that “all this policy will do is pad the pockets of developers who flog house and land package boxes”.
Di Natale shared Pape’s concerns.
“We’re seeing a downturn in the property market, negative equity is a real possibility, and this policy has the potential to be inflationary, drive up house prices and be counter-productive,” said the Greens leader said on Q&A.
“You don’t deal with it through a policy that gets young people in a debt trap.
“I think Labor should have held strong, I know there was obviously a political imperative here, but it was a desperate attempt in the last week of an election from a government that had been silent on housing for years and years.”