Does Jim Chalmers expect house prices to increase with the 5% deposit idea? (The government is expanding the scheme where it will guarantee the rest of a (limited number) home buyer’s deposit, and lowering what is needed under the scheme from 10% to 5%)

Chalmers says:

On our advice, we’re not expecting there to be a substantial impact on demand or on prices. But also, you’ve got to recognise, James, that this is not the first step we’re taking in housing. We’ve got a $43 billion agenda, and the primary focus of that agenda is to build more homes. And again, that’s what goes to the difference here. We’re talking about smaller deposits and more homes. Our opponents are talking about fewer homes and higher prices. That’s because they will cut the Housing Australia Future Fund. That will mean fewer homes. And so, again, I think yesterday was a really important opportunity for the two sides to lay out their agenda. If you vote for Labor on the 3rd of May, you will get more homes and you’ll get smaller deposits. If you vote for Peter Dutton and the coalition, you’ll get fewer homes and high prices. That’s the difference.

Q: On the 5% – to stay on your policy for a minute – if we see a whole lot more first-home buyers rush into the market and then there’s a market downturn, will that mean that the government could be on the hook if people default on their loans?

Chalmers;

First of all, it’s very unusual in Australia to see that outcome. Secondly, we know from the existing program that there has been an absolutely miniscule amount of defaults on these debts. So we are extremely confident that this is a very responsible way to get more first-home buyers into the market – and not in isolation, but by building more home for first-home buyers as well. So we’re dealing with the supply issues, which are the most important issues. We’re dealing with the issues around the deposits. Because those are the two biggest obstacles, to young Australians in particular – first-home buyers right around the country getting a toehold in the market. So we’re dealing with deposits and supply. Again, our opponents are dealing with – they want to propose fewer homes and higher prices for younger people, and that will make it harder for them, not easier.