This article analyzes the impact of Australian Labor and Coalition parties' housing policies on first-home buyers. The analysis uses several assumptions, including a 3% annual wage growth, 4% mortgage insurance cost, and 5% annual superannuation returns. It acknowledges that the modeling is not reflective of individual circumstances.
Both parties aim to increase housing supply, with Labor promising $10 billion for 100,000 homes and the Coalition $5 billion for infrastructure development. Both also plan to limit migration. The article highlights the sensitivity of the policy's benefit to factors such as the real rate of return on superannuation, interest rates, property value increases, and personal choices.
The Coalition's policy benefits could be amplified if buyers choose more expensive properties leveraging their super. The article emphasizes that the modelling involves simplifying assumptions that might not reflect all personal financial situations and preferences.
These calculations are based on some big assumptions to calculate how the policies would work in the real world, including that wages grow at 3 per cent a year, mortgage insurance costs 4 per cent of the loan value, superannuation contributions stay at 12 per cent rate from 2025-26, and super funds deliver net annual returns on superannuation of 5 per cent. We’re also assuming the couples take out a 30-year loan with 7.5 per cent annual interest each, and there are no changes to tax bracket thresholds over the period.
We also assume that the retirement age will remain 67, and we don’t account for the impact of these policies on a couple’s Medicare levy contributions.
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That means the modelling will not reflect your exact circumstances, financial position or outcomes. For example, the benefit of the Labor and Coalition policies are highly sensitive to the real rate of return you receive on your super, the mortgage rate you pay over the life of the loan, and how much property values rise by, as well as your personal preferences.
While we’ve assumed each couple would buy the same property in their respective cities under both Labor and Coalition governments, the benefits of the Coalition’s policies could be more significant if couples choose to buy a property that is more expensive than one they would buy if they were unable to draw down their super, and it then increases in value over time.
Both major parties also have housing policies to increase supply, with Labor promising to spend $10 billion to build 100,000 homes while the Coalition plans to invest $5 billion to fund essential infrastructure such as water, power and sewerage at housing development sites. Both parties are also promising to limit migration, which influences housing demand.
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