Prime Minister Anthony Albanese is set to unveil a significant housing initiative at Labor's campaign launch in Perth on Sunday, April 13, 2025, promising a $10 billion scheme aimed at facilitating the construction of up to 100,000 homes exclusively for first home buyers. This ambitious plan is designed to address the pressing issue of housing affordability, particularly for young Australians looking to enter the property market.
The proposed initiative will allow all first home buyers to purchase a home with just a 5% deposit, a substantial reduction from the traditional 20% deposit requirement. This change will enable buyers to avoid costly lenders mortgage insurance (LMI), which can average around $23,000. The current government guarantee for a 5% deposit is only available on a means-tested basis, limited to individuals earning up to $120,000 and couples up to $160,000. Under the new scheme, these income caps will be abolished, making home ownership accessible to a broader range of Australians.
According to Albanese, "When a young person saves a 5% deposit, my government will guarantee the rest with their bank. This will help people buy their first home faster, without paying the burden of Lenders Mortgage Insurance." The government aims to increase the property price limits for eligible homes, which is crucial in high-cost areas like Sydney and Melbourne. For instance, a Sydneysider could potentially buy a $1.5 million property with a $75,000 deposit.
The initiative is part of a larger commitment by the Albanese government, which has now pledged a total of $43 billion towards housing over its term. This includes the initial $33 billion investment, which has already faced scrutiny for not meeting its targets. The new $10 billion investment will be divided into $2 billion in grants and $8 billion in zero-interest loans or equity investments, primarily to support state and territory governments in identifying suitable land for development.
Housing Minister Clare O'Neil emphasized the urgency of the housing crisis, stating, "Young Australians are bearing the brunt of the housing crisis, and our government is going to step up to give them a fair go at owning their own home." The construction of these homes is expected to begin in the 2026-27 financial year, with the first residents moving in from 2027-28.
The government is also looking to partner with state developers and industry stakeholders to expedite land release, rezoning, and planning approvals. This collaborative approach aims to fast-track the building process and ensure that the homes are available as soon as possible.
The median home price in Australia currently stands at approximately $820,000, meaning a 5% deposit would amount to $41,000. With the proposed changes, first home buyers in cities like Brisbane could purchase homes priced at $1 million with a deposit of $50,000, while in Perth, a home priced at $850,000 would require a deposit of $42,500.
As the campaign heats up ahead of the May 3 federal election, Labor's housing policy represents a strategic move to connect with younger voters, who have expressed rising concerns over housing affordability and rental stress. A recent survey by money.com.au highlighted that these issues are among the top priorities for Australians under 40.
Labor's plan is not without its challenges. Critics have pointed out that the government has previously struggled to meet its housing promises, with the Master Builders Association warning that only 165,000 new homes were constructed in the year leading up to September 2024, significantly below the 200,000 annual target needed to meet the government's long-term goal of 1.2 million new homes by 2029.
This ambitious housing initiative comes at a time when the opposition, led by Peter Dutton, has made housing a focal point of its campaign. Dutton's coalition has criticized Labor's record on housing, suggesting that the government is not doing enough to address the crisis. Albanese's announcement in Perth is seen as a direct response to this criticism, aiming to reinforce Labor's commitment to tackling the housing crisis head-on.
In summary, Albanese's housing plan promises to revolutionize the way first home buyers enter the property market by providing financial support and increasing accessibility. As the election approaches, the effectiveness of this proposal will be scrutinized, particularly in light of the government's past performance in delivering on housing commitments.
