The housing policies of both major parties are bad for Australia’s aspiring homebuyers | Saul Eslake

Both sides of politics proposed policies which will put upward pressure on housing prices.

The Coalition is proposing that, if elected, it will make interest payments on mortgages (up to a maximum value of $ 650,000 ) taken out by first home buyers who purchase newly built houses or apartments tax-deductible for the first five years .

But we know from past experience the big falls in interest rates that occurred during the global financial crisis and the Covid-19 lockdowns that first homebuyers won’t actually save these amounts.

And so house prices will go up as they always do.

Politicians know that at any point in time there are more than 11 million voters who own their own homes, and more than 2.25 million who own at least one investment property.

The last thing those 11 million to 13 million voters want is anything that might restrain let alone halt the rate of property price inflation.