Nat Barr gives Albanese minister Clare O’Neil a wake-up call over ‘five per cent deposits’, amid warning house prices will explode

Sunrise host Nat Barr has confronted federal Housing Minister Claire O’Neil over the expansion of Labor’s five per cent deposit scheme, amid dire warnings the country’s house prices will explode.

The program is expected to open doors for young families entering the housing market, allowing first home buyers to vault over the deposit hurdle without paying expensive mortgage insurance.

Treasury modelling currently suggests the impact on housing values will be 0.5 per cent over six years. Other bodies, such as the Insurance Council of Australia, forecast home values to rise by 10 per cent in the first year alone.

On Wednesday, Barr was joined by O’Neil and Liberal Senator Bridget McKenzie, taking aim at the impact of adding thousands more homebuyers into the market.

“You’re adding demand into a hot property market. Even the Reserve Bank Governor says nothing you do will have any impact on the supply of houses in this country for the next two years at least. So, something is going wrong here?” Barr asked.

“What we are doing here is genuinely opening-up home ownership to a generation of young people who tell you, who tell me, the biggest barrier they face is the time to save a deposit,” O’Neil replied.

Barr questioned her on house prices rising, saying buyers will need to pay more in the future. However, O’Neil argued it would bring down the average time of 11 years to three years, for a young family to save their deposit.

“High school economics says if you increase demand and not supply, which you are not doing enough, by all accounts, even the RBA Governor says you are not. If you increase demand and not supply, the prices will go up. So, once those people try and buy those houses, they will realise that the price is higher, and they have to lift the money they have to pay,” Barr asked.

O’Neil responded: “Department of Treasury, the best economists in the country, looked at this and that’s not the finding they made. They said it will have half a per cent change in house prices over the next six-year period.”

“We are giving people the opportunity to get into the market. If you want to get your kids into the market, if there are people in your family who are amongst the many people desperate to get home ownership, this is a real pathway for them.

“As of today, everyone is eligible to get in with a five per cent deposit and our government is backing it and I’m surprised to say that the Coalition are not supporting this.

“This is particularly beneficial to young people across the regions who are trying to get into home ownership, and we are giving them a chance.”

Earlier in the interview, Barr reminded O’Neil of the fact everyone outside of Treasury has said it will push the prices up for homes, even more than the median Australian property value, which climbed to $857,280 in September.

Barr asked: “You have everyone, besides Treasury, who say this will whack prices up so people will be at a disadvantage. Just about every economist is saying Treasury is wrong. Prices will go up way more than 0.5 per cent?”

O’Neil responded: “We know the real answer to the housing affordability challenges facing our country is that we have got to build more homes quickly. Our government is doing that.”

Barr pulled her up on the numbers.

“You are failing on that. Approvals slumped in August, 6 per cent. They slumped in July by eight per cent. You are on track to build about 190,000 homes and you are supposed to be building 240,000 this year,” she said.

O’Neil replied: “If we look across the year-to-year numbers, we have housing starts, that is new houses getting started, has lifted 17 per cent over the last year. We are seeing meaningful change this year.

“This is a 40-year-old problem for the country. I’m not going to look a young generation of people in the eye and tell them we are not doing anything for them.”

McKenzie chimed-in saying, saying the government needed to cut immigration.

“Cut immigration, Clare. You have (Home Affairs minister) Tony Burke adding 205,000 permanent migrants coming in the next year, all needing somewhere to live,” McKenzie said.

“You can spruik your five per cent deposit scheme, but the Reserve Bank Governor says you are not going to get there, even Treasurer Jim Chalmers said you won’t get the housing built.

“Sticky inflation, which was mentioned by the Reserve Bank Governor yesterday, in her comments on keeping rates where they are is a key component in driving up construction costs for new houses.

“With every measure, you are making decisions that drive the price up, drive demand up whilst decreasing supply and that’s a recipe for disaster, not a solution.”

- with AAP