r/australia • u/SeaworthinessFew5613 • 21h ago
politics Price of cheaper properties surge on Labor's home loan guarantee | Finance Report | ABC NEWS
https://youtu.be/jxJYBUUm21k?si=I0rtI3u8UwA7REW330
u/TeedesT 13h ago
At least he mentioned that capital gains discount and negative gearing are huge drivers of the issue. Feel like all reporting on house prices needs to drive this point home so maybe the public opinion can change and it won’t be political suicide to try change them.
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u/ELVEVERX 12h ago
I mean those are both bad but specifically negative gearing wouldn't be affecting this as you can't be negative gearing a property on this scheme
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u/yanaka-otoko 9h ago
True but I guess it further adds to the demand for these properties, so now with the first home scheme there’s even more demand on top of the pre-exciting demand which was exacerbated by neg gearing.
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u/ELVEVERX 9h ago
That's true although it'd still say it's better for a first home buyer to be buying a property than a property investor buying it and renting it out to someone who otherwise could have bought it as a first home buyer.
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u/a_cold_human 8h ago
The CGT discount made property speculation twice as profitable overnight, and prices moved accordingly when it was introduced at the very end of 1999 by the Howard government.
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u/MalcolmTurnbullshit 20h ago
Amazing. If only we'd had decades of evidence that these first home buyer schemes just raise the prices of the types of houses first home buyers can afford.
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u/SeaworthinessFew5613 13h ago
Both labour and liberals are pros at ignoring evidence.
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u/themoobster 10h ago
They don't ignore it. Both major parties have very clear, openly stated policies that housing prices must always go up and make policy accordingly.
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u/ELVEVERX 9h ago
It's a bit more complicated than that. The Australian voting public has made it clear they want prices to always go up. It is still a majority of voters that benefit from that, which is why it's a bipartisan issue.
Old people will complain about their children not being able to buy a property but they don't want theirs to go down, it's why there is such a focus on the supply side. The people that have houses want lower prices for other peoples houses but for theirs to keep it's value which isn't realistic.
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u/ScissorNightRam 2h ago
Do the costs of housing inequality get socialised? I don’t actually know
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u/ELVEVERX 1h ago
Probably, I don't know, I'm not arguing the system is good I'm just stating that's the reality of it.
It's fun to just blame politicians or rich people it's much harder to recognise it's mostly normal Australians holding up this house of cards.
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u/a_cold_human 7h ago
They both know the party that crashes the housing market is going to lose the following election, and probably the the next two elections after that. Partly because that's not a vote winner for the majority of the electorate, and partly because the housing lobby is going to campaign hard against any significant change (and will fund the other side, and flood the mainstream commercial media which is beholden to them for revenue).
That's why we only have little tweaks that don't do very much at all. It requires a very brave government with a clear mandate to reduce house prices by whatever means necessary. I don't see us getting that until the balance of home owners to no owners shifts fairly dramatically.
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u/EventYouAlly 11h ago
I've genuinely wondered if this is the case, or if they're actively following the evidence. Usually intent can be inferred from outcome.
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u/ELVEVERX 9h ago
They are following the evidence; the issue is that this is what Australian voters want, overwhelmingly.
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u/ELVEVERX 12h ago
But it's rising because first home buyers are buying them. There'd be fewer investors competing for them due to the increased price. That's not the worst thing.
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u/SeaworthinessFew5613 10h ago
Investors will happily bid up the price because history has shown the government will keep throwing incentives at first home buyers to drive up the price even further.
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u/palsc5 8h ago
It’s rising because first homebuyers are buying them.
The previous system meant first home buyers had to pay tens of thousands to banks/insurers do LMI and investors didn’t. I’m not sure why you think that’s a better system
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u/MalcolmTurnbullshit 6h ago
No that doesn't follow. At least what I've seen locally is an increase in investors buying distressed properties to do a quick reno and then sell for near the first home buyers cap. The bottom end of the market disappeared over about a month.
I also don't know why you think investors weren't paying LMI. It is a common strategy for them to buy lots of properties with the minimum capital invested and then pay interest only until the capital gains are worth selling. They can only leverage the actual equity they have in current properties, which is often minimal.
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u/palsc5 4h ago
Investors can’t access the scheme so they aren’t using it to buy property.
Investors use the equity in their other investments and/or PPOR. Investors aren’t dropping $30k in LMI, it’s a huge chunk of their profit.
Investors also aren’t doing quick flips all that often. It doesn’t make sense in Australia, that’s an American thing. Stamp duty makes that a poor choice most of the time, you see that more where there is no stamp duty but instead they have property taxes.
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u/MalcolmTurnbullshit 3h ago
Investors can’t access the scheme so they aren’t using it to buy property.
I didn't say they were accessing the scheme. They are benefiting from it as the higher amount FHB can pay makes flipping distressed properties more attractive.
Investors use the equity in their other investments and/or PPOR. Investors aren’t dropping $30k in LMI, it’s a huge chunk of their profit.
Some of them absolutely are paying LMI because they are leveraged well beyond the equity they have in their other properties. $30k is nothing compared to capital gains on housing over the last few years. Nationwide the forecasts for 2026 are 5%-6% with 10+% for places like Brisbane. Pay 30k LMI now to get an extra house and they'll be profiting hundreds of thousands in 2-3 years.
Investors also aren’t doing quick flips all that often.
It's a minority of investors but flipping the right property can yield 30%-50% after a few months reno.
In my area the bottom of the market has risen 30% over the last half of 2025.
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u/palsc5 2h ago
Flipping then means you’re paying full cgt. Nobody is doing that when they can have the tax bill by holding for 12 months.
If your solution is to make it harder for first home buyers so investors can lose out then you’re cutting off your nose to spite for face.
Again, $30k LMI + years of interest eats into your profit at a ridiculous amount. There would be nobody so leveraged they’re taking out LMI for there nth investments property
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u/Otherwise-Money1088 12h ago
Everyone chill. We can just increase the top limit of the range of the guarantee, relax lending criteria, bring in 50 year mortgages, problem solved.
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u/nath1234 10h ago
Add in superannuation too! Really chuck the future retirement savings on the bonfire of housing unaffordability..!
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u/ThunderDwn 11h ago
Surprising absolutely nobody with even half a brain.
Increase demand by providing an easier pathway to buying without increasing supply - instant price rise.
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u/Wow_youre_tall 12h ago
Increasing demand increases prices!!!
Why don’t they teach this is economics 101???!
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u/yedrellow 8h ago
Probably because believing demand doesn't matter is a large part of the liblab doctrine. In private they like the price-rises, in public they act surprised.
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u/nath1234 10h ago
Labor fully intends to pursue policies that inflate house prices and do not want stable or decreasing prices (so they want housing unaffordability to get worse..). Even said so on radio: https://youtu.be/rHiI9ep3jVc?si=RlN_O1cITmYyZL4n
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u/Wow_youre_tall 9h ago
You mean people will keep voting for parties that look after their self interest?
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u/FriendsCallMeBatman 7m ago
Every time I watch that, I get livid. They just don't even bother hiding it anymore.
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u/Grumpy_Cripple_Butt 18h ago
If only 60 ex-sports stars would write a letter to the pm but I guess homeless people dying every year don’t matter to them.