BEN HARVEY: Albanese’s housing guarantee scheme is a disaster waiting to happen

Unless you were living under a rock (which some may have been, given the extent of the property crisis) you would have heard that the Prime Minister has brought forward his housing guarantee scheme.

First homebuyers will now need to come up with a 5 per cent deposit instead of the traditional 20 per cent.

This means that from October 1, home loans will be written for people previously considered a credit risk.

Sorry to be the Grinch that stole the great Australian dream, but it’s true. And Australian taxpayers are now on the hook if this new generation of borrowers default.

Anthony Albanese says the change will benefit thousands of people.

It will.

There is a name for loans given to people who can’t afford them

Thousands of real estate agents will take a 3 per cent clip of the ticket when they sell houses to people who can’t afford them.

Thousands of bank executives will earn generous bonuses by writing fresh loans for a previously untapped finance market.

And thousands of luxury car dealers will make fat commissions by selling BMWs and Audis to the property spivs and financiers whose snouts are about to press deeper into the taxpayer-guaranteed trough.

Will thousands of first home buyers benefit? Probably not, because the only way out of this affordability crisis is building more houses and we’re not doing that.

Albo keeps parroting the pledge to build 1.2 million new homes within five years. How long before he starts flashing a brickie’s trowel at press conferences instead of that bloody Medicare card?

Which builders are going to tool up for all that new work.

It certainly won’t be the 3000 that went broke last year (that was a 28 per cent increase in insolvencies on 2023) so let’s hope that in this instance the trend is not our friend.

They didn’t go under for want of work, incidentally, they went broke because of cost blowouts, planning delays and, most pressingly, labour shortages.

There are fewer tradies because the Federal Government cut the migrant intake. Perhaps they were eating the dogs?

Does anyone believe that the existing cohort of Australian tradies is going to be able to build 1.2 million extra homes in the next few years?

Going to whip up a few three-by-twos in between lunch and three smoko breaks spent backing out the pie and choc milk they had for morning tea?

To make good on his promise Albo needs to build 240,000 houses a year. That’s a level of activity we’ve achieved just twice in 2016 and 2021.

Even his own Treasury doesn’t believe him. They called bulls**t on the target weeks ago (and then accidentally sent the unvarnished advice to the ABC).

That’s the same Treasury, incidentally, which confirmed exactly what anyone who took economics 101 knows — that this new turbocharged homebuyers policy will push prices up.

The Federal economics wonks reckon median prices will rise by 0.5 per cent. Economist Chris Richardson says that would wipe out the benefit in one fell swoop.

Lateral Economics has estimated the threshold changes will boost prices by between 4 and 7 per cent.

Why would we expect otherwise?

Demand is about to go through the already-overpriced roof of every house.

We’re abolishing the cap on the number of people who can access the scheme. It was previously limited to 50,000 people because Treasury was worried about the liability of defaults.

Boring.

We’re abolishing the cap on incomes for eligibility. That used to be $125,000 for singles and $200,000 for couples but now any trust fund baby can do it.

And the value of the homes that can be purchased has been boosted to the point that we as taxpayers are now going to help someone in Sydney pay up to $1.5 million for their first house.

Housing Minister Clare O’Neil told us “we need to lean in and help those first home buyers get their foothold in the market”.

Lean in? I don’t think my house is worth $1.5 million but I have to look after some 20-something from the north shore who wants to live closer to mummy and daddy?

Sydney’s an expensive place and the previous cap of $900,000 wasn’t cutting it. But this measure isn’t going to make the Harbour City any cheaper.

There is a name for loans given to people who can’t afford them.

They’re called sub-prime mortgages and they caused the global financial crisis in 2007.