Analysis by the Parliamentary Library has shown that Labor’s ‘Help to Buy’ housing scheme is unlikely to be accessible to any of the key professions Labor have claimed would be eligible to receive assistance getting into home ownership.

Labor has claimed that 40,000 nurses, childcare workers, teachers and paramedics would be able to buy a home through the program if it were legislated.

But the analysis, completed by the Parliamentary Library and commissioned by The Greens, makesclear that workers in these professions would either not qualify due to exceeding the scheme’s strict income limits, or by entering the scheme find themselves in severe financial stress to meet mortgage repayments.

In an address to the AFR’s Property Summit on 9 September, Labor’s Minister for Housing Clare O’Neil, claimed that “40,000 Australians – nurses, childcare workers, teachers – would all be able to buy a home through [Help to Buy].”

The Minister later told a press conference discussing Help to Buy on 16 September, that the government “want to make sure [home ownership] is still accessible to childcare workers, to nurses, to paramedics. And the bill that we have in the Senate this week is targeted exactly at that”. 

Under Labor’s Help to Buy plan, a single person must not be earning more than $90,000 in order to qualify. This means the average full-time earnings for a registered nurse ($112,900) or a paramedic ($127,600) would render them ineligible for Help to Buy.

While a childcare worker would meet the income test for the scheme based on their average full-time earnings ($67,430), the analysis shows that by participating in the scheme the same childcare worker would be placed under severe mortgage stress, requiring between 56-95% of their earnings to pay off a mortgage in Sydney, Brisbane or Melbourne, even with the government taking a stake in their home. 

Mortgage stress is typically defined as paying at least 30% of one’s income on a mortgage.

Similarly, while a nurse on a starting salary at the lower end of their professions earnings could meet the income test for the scheme, they would be required to pay between 53-66% of their earnings on their mortgage repayments on a home in Brisbane, or 83-104% of their earnings on a home in Sydney.

A primary school teacher on an average full-time salary of $105,000 would not qualify for the scheme at all, while a teacher on a starting salary participating in Help to Buy would spend between 60-75% of their earnings meeting a mortgage repayment in Sydney, 57-71% on repayments in Melbourne, or 51-63% of their earnings in Brisbane.

In addition to income limits, Help to Buy imposes caps on the prices of participating homes which are below the median dwelling prices in many locations, including Brisbane and Sydney. The analysis is based on CoreLogic median dwelling prices in Melbourne, and on the Help to Buy price caps in Brisbane and Sydney, which are already below average prices. The analysis assumes a standard mortgage was taken out of the remaining portion of the home purchase price (i.e. excluding from the mortgage the government’s shared equity contribution of 30% and the 2% deposit).

These issues add to the growing body evidence that the bill won’t help renters and first home buyers. Expert evidence economists presented to the Help to Buy senate inquiry showed that it was likely to push up prices for everyone, while only helping a maximum 0.2% of renters. A detailed policy briefing of these issues including Senate expert testimony is available here.

A similar Help to Buy scheme in New South Wales, with the same income requirements and house price limits, failed after only filling 503 places out of 6000 offered in its first two years (a 92% failure rate).

Labor have tried to force their bill through the Parliament, where it needs the support of the Greens. The Greens have outlined key negotiating asks in return for support on Help to Buy:

• action on freezing and capping rents, 
• Scrapping the tax handouts for property investors that stop renters buying their first home, 
• and establishing a government owned property developer, which would build 610,000 homes to be sold at just above the cost of construction and with rents capped at 25% of income.  

In the most recent sitting of Parliament, Labor tried to bring on a vote to defeat their own Help to Buy bill in the Senate, but the Greens forced the Senate to delay further consideration until 26 November. 

The Greens have made clear they are prepared to negotiate, and are aiming to use the extra time to build pressure on Labor in order to bring them to the table and secure movement on their housing policy asks, as they did successfully in negotiations on Labor’s Housing Australia Future Fund where the Greens secured an additional $3 billion in direct investment in public and social housing in exchange for their support.

Labor have stated they intend to reintroduce the Help to Buy bill to the House of Representatives this week, in an apparent threat to establish a double dissolution election trigger. Despite the PM’s bulldozing, it is not credible that this bill could be a double dissolution trigger for an election, as the government would have to successfully have the Senate consider the bill again the week before Christmas, likely requiring the agreement of the Senate, and then call an election before Australia Day for a February election which would be unprecedented. 

Lines attributable to Max Chandler-Mather MP, Greens spokesperson for Housing:

“It is cruel and deeply dishonest for Labor to suggest their dodgy scheme will help teachers, childcare workers or nurses when the reality is they will either be completely ineligible or otherwise unable to afford the mortgage repayments under the scheme.”

“Like so many Labor and Liberal housing schemes that have come before it, Help to Buy is designed only to look like the government is doing something to help when in fact it will just drive up house prices for everyone.”

“If you want to help people buy a home, then Labor should work with the Greens to phase out negative gearing and the capital gains tax discount, and establish a government owned developer to build quality homes and sell them for cheap to first home buyers.”

“The Greens are ready to negotiate on a plan that actually helps people buy a home, but we will not just rubber stamp a bill that will drive up house prices and force people into severe mortgage stress.”

“As long as the Federal Government keeps dishing out billions of dollars in tax handouts to property speculators through negative gearing and the capital gains discount, then property investors will keep beating first home buyers at auctions and bidding up the price of housing.”

“Under the Greens plan for a public property developer, workers in any profession who bought one of 610,000 government built homes would save $249,000 on average on the cost of a home, or $319 per week on average if they were a renter.”

“In contrast, Labor’s scheme doesn’t build a single new home and instead will only make housing further out of reach for 99.8% of renters by driving up prices.”