The Coalition have demonstrated yet again their focus on housing affordability for young Australians, releasing a policy to provide tax deductibility on mortgage interest repayments for 5 years, Member for Mallee Dr Anne Webster MP said this morning.

The Coalition initiative – an Australian first – will allow tax deductions on interest repayments on the first $650,000 of a mortgage.  The program will apply from 1 July this year to new houses bought by first home buyers earning up to $175,000 or couples jointly earning up to $250,000.  The policy proposal expands the Coalition Government-era Home Guarantee Scheme – which helped 1 in 3 first home buyers purchase or build their own home in 2023/4.

“The Coalition has a long and proud record of supporting aspirational Australians who want the security of owning their own home,” Dr Webster said.

“This initiative comes as mortgage holders are $50,000 a year worse off under the Albanese Labor Government.  The Coalition mortgage interest tax deduction also helps address supply issues for housing by ensuring it can only be applied to new builds.”

Dr Webster highlighted that the Coalition has a comprehensive plan to support home ownership and address Labor’s housing crisis - should the Coalition form government after 3 May -addressing both supply and demand pressures:

Supply measures include:

·         Delivering $5 billion through the Housing Infrastructure program (including $1.5 billion in regional Australia) to fund essential infrastructure such as water, sewerage and power to unlock 500,000 new homes nationwide

·         Providing small-to-medium enterprises with $12,000 to support putting on a new trainee or apprentice, including a focus on building and construction, to boost the home-building workforce

·         Cutting red and green tape for builders, freezing further changes to the National Construction Code for 10 years

·         Restoring the Australian Building and Construction Commission and deregistering the lawless CFMEU to tackle union corruption that has driven up building costs by up to 30 per cent,

Demand measures include:

·         Allowing a first home buyer (and those that have been out of the housing market for 10 years) to purchase a house with a 5 per cent deposit for the purchase price under the 2020 Coalition-era First Home Buyer Guarantee Scheme

·         The Super Home Buyer Scheme providing the choice for first home buyers (and those that have been out of the housing market for 10 years) to use up to $50,000 of their superannuation towards a housing deposit, which must be paid back into superannuation on the later sale of the house,

·         Requiring the lending regulator, the Australian Prudential Regulation Authority (APRA) to consider its policy impact on first home buyers (and those that have been out of the housing market for 10 years), reducing the overly cautious serviceability buffer (currently 3 per cent, which APRA adds as a ‘buffer’ to the home loan interest rate when determining a borrower’s ability to repay the mortgage)

·         Delivering a strong economy with lower inflation to keep interest rates low

Meanwhile, the Housing Industry Association projected in February that Labor will fall about 20 per cent short of its 1.2 million homes target over the next 5 years.

The Coalition are also addressing housing demand by reducing Labor’s record migration program to sustainable levels, to free up 40,000 extra homes in the first year and over 100,000 homes in the next 5 years – and banning foreign investors and temporary residents from buying existing homes for two years.

The Coalition’s mortgage tax deductibility proposal is estimated to save around $12,000 a year for a first home buyer with a $650,000 mortgage at 6.1 per cent interest – approximately $60,000 over 5 years.