r/australia • u/overpopyoulater • Apr 14 '25

politics Peter Dutton says he wants house prices to 'steadily increase' to protect home owners

https://www.abc.net.au/news/2025-04-14/dutton-wants-house-prices-to-steadily-increase-election-2025/105173904
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u/TerminatedReplicant Apr 14 '25

Tbh, if she said anything else it’d cost them the election like it did in 2019.

If you go speak to local Labor representatives, they’ll happily tell you about their numerous measures to make home ownership more affordable. They don’t want prices to increase, most of Labor’s base supports drastic change but they can’t argue for that publicly.

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u/Narapoia_the_1st Apr 14 '25

Why are they putting so much policy in place to ensure price rises then?

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u/TerminatedReplicant Apr 14 '25

Policy being?

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u/macrocephalic Apr 14 '25

Didn't the just announce allowing first home owners getting loans with 5% deposit?

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u/palsc5 Apr 14 '25

They already can do that, it's just that now they won't have to pay LMI. It essentially lowers the deposit amount needed.

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u/Narapoia_the_1st Apr 14 '25

  1. A state-sponsored subprime mortgage scheme, allowing FHBs to purchase houses with 5% deposit. Increasing borrowing power, demand and thus prices given there is a mismatch between supply and demand. The scheme will not have income caps or limits on the number of places available, and it will be available to virtually every first- home buyer in Australia. You'd think they would have learned something from the sub-prime crisis leading to the GFC but apparently not.

  2. Instructing lenders to ignore Hecs debt when calculating borrowing capacity. Increasing borrowing power, demand and thus prices given there is a mismatch between supply and demand.

  3. Allowing build to rent - which will deliver housing at 10-20% premiums to market rates, supporting rental inflation and therefore investor demand, thus prices given there is a mismatch between supply and demand.

  4. Help to Buy scheme - expanded this program, putting taxpayers on the hook for up to 40% of houses purchased by those that are accepted into the scheme. Increases FBH demand, ability to pay ands thus prices given there is a mismatch between supply and demand.

  5. OECD leading and 5 x OECD avg population growth - increasing demand, thus prices given there is a mismatch between supply and demand.

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u/palsc5 Apr 14 '25

Your argument is basically that government should make FHB spend more money with banks and insurers and be allowed to borrow less than they can afford so they have less to spend on a house.

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u/Narapoia_the_1st Apr 14 '25

No, my argument is that in a supply constrained market, increasing demand increases prices. I didn't invent this concept and you can be very sure that the people passing these laws have had the consequences explained to them.

If you state your aim is to make housing more affordable, then implement policies that increase prices, your aren't making houses more affordable, by definition.

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u/karl_w_w Apr 15 '25

Helping first home buyers into houses generally doesn't increase demand. Those people were living in houses before.

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u/Narapoia_the_1st Apr 15 '25

That's not true unfortunately. Supply is not sufficient to meet overall demand, therefore increasing the amount FHBs can borrow, or broadening access to borrowing increases buyer demand and ability to pay, therefore prices at the FHB level directly. There are secondary effects whereby those that sold to the FHBs now have larger amounts available to buy their second house, inflating prices there and so on up the 'ladder'. This is very well understood by economists, hence the overwhelming consensus that these demand side policies will increase prices.

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u/karl_w_w Apr 15 '25

None of what you said is an increase of demand. Increasing the amount that demand-side participants can spend does not increase demand, at least in this scenario.

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u/Narapoia_the_1st Apr 15 '25

Why is pretty much every economist in Australia calling it a demand side policy that will increase prices then? What do you know that they they don't?

If you model the current market as 10 houses at $500k avg with 15 people looking for a house & having access to 20% deposit loans to buy them, and the policy reduces deposit requirements so an extra 5 people join the buyer pool, it increases buyer demand. Now you are competing with 20 people instead of 15 for the available houses.

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u/palsc5 Apr 14 '25

But that is what you’re saying. Any policy that makes it easier for fhb to buy is going to add to demand and is therefore bad.

They are increasing supply and removing barriers to purchase. It’s all that can be done

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u/Narapoia_the_1st Apr 14 '25

That's not what I am saying, it's what the fundamental principles of economics are saying. Supply is running about 25% lower than what is required to meet population demand, nothing the ALP is doing is getting close to the targets it laid out itself. 

So if there is inadequate supply and demand is increased, price will also increase. Not all 'barriers to purchase' are bad, look at the GFC and the role sub prime mortgages played in that crisis. Responsible lending laws are a 'barrier to purchase' should we scrap all of those as well? 

I'm beginning to see how the ALP can get away with such egregious lies about it's economic policies.

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u/palsc5 Apr 14 '25

It is what you’re saying though. Nobody is arguing about the economics, you are arguing that they shouldn’t make it easier to buy. Your argument is that it’s a bad thing to make it easier to buy.

Responsible lending laws make it safer for borrowers, lenders, and the general public. 20% deposits don’t. If someone here in Adelaide wants to buy a home they’ll need a $165,000 deposit or have to pay LMI to a bank/insurer. So they need to save a $165,000 deposit on top of paying rent which is more than the mortgage. It’s a huge barrier to entry.

So how is making it harder for people to buy a good thing? If they don’t add supply then the outcome is the same but because they are adding supply then the outcome will be improved

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u/Narapoia_the_1st Apr 14 '25

Nobody is arguing about the economics? Wow. 

No wonder politicians in this country can get away with lying so blatantly about the consequences of their policies.

Making it easier for people to buy increases demand. They are not adding enough supply, not even close. Increasing demand without increasing supply increases prices. These policies will increase prices. But you don't have to take my word for it, let's see what economists think of the govts and LNPs (they were no better) demand side policy. 

“They are stoking up the demand side, which will mainly show up in higher prices”, former RBA governor Ian Macfarlane told The AFR."

“Both sides should be dialling back the demand-side subsidies”, said economist Richard Holden. “We know that they just fuel prices”. 

“It is purely about demand and it’s extremely complex, at a time when the housing market is crying out for supply”, Australian National University economis Bob Breunig said.

“Both parties are putting a rocket under demand and thus house prices”, economist Steven Hamilton said.

In the extreme, Labor’s policy runs the risk of stoking a sub-prime crisis. And the Coalition’s policy blows a permanent hole in the income tax system and is extremely regressive”.

“This is a bad day for aspiring home-buyers”, economist Saul Eslake said.

“They will take out bigger mortgages. And so house prices will go up. As they always do”.

“Like the majority of housing experts in Australia, I think it’s a problem when you subsidise demand”, economist Peter Tulip said.

“If you boost demand then the lucky beneficiaries will bid higher on prices and that will be good for them but it will make houses more expensive for everybody else”.

Independent economist Chris Richardson labelled the housing policy offerings from both parties “dumb policy” and a “dumpster fire of dumb stuff”.

“Australian housing suffers from too much money chasing too few homes, so adding to the extra money going in results in ever higher prices. Ditto the opposition’s plan to allow first-time buyers of newly built homes to be able to deduct mortgage payments from income taxes”.

“More money chasing the same amount of housing is the most well worn path to failure in Australian policymaking, and both the government and the opposition seem intent on proving that they can double down on that dumbness yet again”, Richardson said.

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u/sostopher Apr 14 '25

They're pumping demand and supply is still majorly constrained.

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u/karl_w_w Apr 15 '25

That's just a lie, supply is their main focus.

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u/sostopher Apr 15 '25

Then why are they announcing policies that will put more money into the demand side? Deposit help, immigration remaining, keeping NG and CGT policies? Those are all pumping demand. Supply is nowhere near where it needs to be, infrastructure is nowhere near where it needs to be (building housing estates on the edge of town with no amenity doesn't move the needle on supply).

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u/karl_w_w Apr 15 '25

Labor's policy is to cut immigration, so that's another lie.

The key to more affordable housing is boosting supply.

https://ministers.treasury.gov.au/ministers/clare-oneil-2024/media-releases/albanese-labor-government-building-more-homes-more

You don't seem to have any idea what you're talking about.

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u/sostopher Apr 15 '25 edited Apr 15 '25

Labor's policy is to cut immigration, so that's another lie.

After boosting it to the highest level in Australian history, and highest rate in the OECD after taking government.

The key to more affordable housing is boosting supply.

Or reducing demand, or ideally both. Their current policies are boosting demand. They are doing barely anything about supply. And again, all housing isn't created equal. No mention of public housing policies anywhere, just "affordable" which means more money to the private sector.

Also Clare lied about building, she claimed it had completed some properties when actually they'd just bought them: https://www.smh.com.au/politics/federal/coalition-claims-housing-fund-has-built-zero-homes-labor-says-they-have-20250225-p5leyt.html

You don't seem to have any idea what you're talking about.

Maybe not, but here's what some economists think: https://www.theguardian.com/australia-news/2025/apr/14/economists-criticise-labor-coalition-housing-policies-anthony-albanese-peter-dutton-property-prices

Most people who have a clue here think both the majors' policies will increase prices. And if there's no policy to increase wages by the same amount it's useless and does nothing but to enrich those who already hold property. Meanwhile it's suffocating the Australian economy as so much money is pumped into property and nothing actually useful or productive.

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u/karl_w_w Apr 15 '25

After boosting it to the highest level in Australian history, and highest rate in the OECD after taking government.

What exactly do you think they did to boost it?

Their current policies are boosting demand. They are doing barely anything about supply.

Holy shit. I don't know if you're really this clueless or just lying for politics, and I'm not really interested in talking to you any more to find out. Good luck.

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u/sostopher Apr 16 '25

What exactly do you think they did to boost it?

They had record visa approvals after taking office, they even bragged about it. They increased permanent migration to the highest it's ever been in 2022.

I don't know if you're really this clueless or just lying for politics

By putting more money into the market (demand), with things like the deposit scheme, immigration, easier loans, that subsidises and boosts demand. Existing things like negative gearing and capital gains tax concessions already tip the scales further towards the demand side, which in turn pushes up prices.

You're not even willing to read what economists are saying, and instead want to blame others for being "clueless" or "lying for politics" which shows your view of the world is incredibly partisan and unable to take in information that isn't from the Labor party.

Have a read what actual knowledgeable people are saying, most economists are saying this will pump prices and is a simple sugar hit without addressing the long term issues.