How will the 2025 election improve housing affordability for young Australians?

Election day's approaching, and Australians are about to decide who gets the keys to Parliament House. According to the University of Sydney, young voters have two things near and dear to them this election: housing affordability and the cost of living crisis.

Shocking, right? As your mortgage broking experts we have explored what each party has proposed so far

Political leaders face off on strategies to tackle the housing affordability crisis with the national flag as the backdrop.

Deposit Help / First Home Guarantee Scheme

Labor's Proposal: Expansion of the First Home Guarantee, allowing ALL first home buyers to purchase with just a 5% deposit without paying Lender's Mortgage Insurance. No income caps means anyone can access this, which is an expansion from the current system which is income tested.

Coalition's Response: A more limited expansion that maintains some income caps.

Our Thoughts: This will cost taxpayers surprisingly little (around $5.8 million) because the government is only guaranteeing 15% of deposits, and very few people default on mortgages.

The Reality Check: This scheme could help up to 30,000 people annually enter the market sooner, and without income caps, it can help a lot of people into the market who were otherwise ineligible. Utilising the First Home Guarantee can often result in a better interest rate than those not using it.

Accessing Superannuation for Housing

Coalition's Proposal: Allow first home buyers to withdraw up to $50,000 (or 40%) of their superannuation for a housing deposit.

Labor's Response: Strong opposition, arguing it would disadvantage women especially and hurt retirement savings.

Our Thoughts: This policy could temporarily boost first home buyer numbers but the effect would be temporary. Higher earners would benefit less as they can already save deposits.

The Reality Check: McKell Institute warns this could add $69,000-$159,000 to average house prices in capital cities. Their analysis shows using $10,000-$30,000 from super would "do little to help a first home buyer" while leaving them "worse off at retirement." Taking $50,000 from super could cost individuals over $500,000 in retirement funds (at 8% compound return over 30 years).

Help to Buy Scheme (Shared Equity)

Labor's Proposal: Expansion of the scheme where government buys up to 40% of a home alongside buyers with just a 2% deposit. Available to 10,000 people annually for four years.

Our Thoughts: Generally, the Government having an ownership stake in your place should be considered very carefully, and it's not one we like at all. It could be useful in very specific situations, for example purchasing a home you otherwise wouldn't have the means to do so.

The Reality Check: This scheme makes both deposits and repayments more manageable but only helps 40,000 people over four years.

Tax Deductibility on Mortgage Payments

Coalition's Proposal: Allow first home buyers of newly built properties to deduct mortgage interest payments from their taxable income for five years (on the first $650,000 of loans). Income caps apply: $175,000 for singles, $250,000 for couples.

Our Thoughts: This would disproportionately benefit higher-income earners. Example: someone earning $240,000 with a $650,000 mortgage could receive up to $87,000 in benefits over five years, while someone on $60,000 with a $250,000 mortgage would receive only $23,000.

The Reality Check: This could benefit up to 60,000 first-time buyers according to industry estimates, but mainly by shifting existing buyers toward new builds rather than expanding the pool. This would only work if banks factor tax savings into borrowing capacity calculations. Presumably they will.

Housing Australia Future Fund vs. Infrastructure Fund

Labor's Approach: $10 billion Housing Australia Future Fund to build 30,000 social and affordable homes, plus another $10 billion in grants and loans for 100,000 homes exclusively for first home buyers over eight years.

Coalition's Alternative: $5 billion housing infrastructure fund for streets, sewerage, etc., claiming it will enable 500,000 new homes.

Our Thoughts: Both parties are finally competing on supply, not just demand, which should be welcome. However, neither proposal comes close to addressing the National Housing Accord target shortfall of 50,000+ homes annually.

The Reality Check: Housing researcher Hal Pawson calls the Coalition's 500,000 homes claim "surprising" given it equates to just $10,000 per property – about 10% of actual infrastructure costs per home ($110,303 according to recent studies). Labor's $100,000 subsidy per home is deemed "realistic" by experts.

Migration and Construction Workforce

Coalition's Proposal: Cut permanent migration from 185,000 to 140,000 for two years, then back to 160,000, to reduce housing demand.

Labor's Approach: Focus on construction skills in permanent intake without specific visa programs.

What the Experts Say: Grattan Institute estimates that cutting migration by 100,000 and sustaining it for a decade could lower rental prices by about 6%, but notes no government has achieved such reductions since the mid-2000s.

The Reality Check: Construction apprenticeship commencements fell 17.4% last year, with completion rates at just 40%. Starting wages of $598.80/week ($31,176/year) make attracting and retaining workers difficult. Both parties propose incentives (Labor: $10,000 to apprentices; Coalition: $12,000 to employers), but this addresses only part of the workforce crisis.

The Elephant in the Room

What neither party is tackling: tax incentives for property investors. Capital gains tax discounts and negative gearing continue to fuel investor demand and price growth. Economists suggest halving capital gains discounts and limiting negative gearing would cause house prices to fall less than 1% while removing about 16,500 new homes over five years – a small supply impact that could be offset with the recovered revenue.

There is strong doubt that there will be too many policy changes to the investor space, purely as an incumbent or incoming government fears isolating such a huge sector of their voting population.

Election 2025 - Our Take - Will these proposals improve housing affordability?

While both parties are finally competing on supply rather than just demand-side giveaways, these policies will mainly benefit a narrow slice of Australians – primarily those who would have entered the market anyway, just sooner. The structural issues driving Australia's housing affordability crisis remain largely unaddressed.

The good news? Construction costs are falling relative to inflation, and interest rate cuts will improve the business case for new developments. There may be "light at the end of the tunnel," but don't expect dramatic changes to housing affordability trajectories without more fundamental reforms.

As always, if you'd like to discuss how any of these policies might affect your personal situation or borrowing capacity, don't hesitate to reach out. We're here to help you navigate this crazy system, regardless of which party ends up holding the keys to The Lodge.