Housing Minister Clare O’Neil forced to defend claims housing stimulus drove price surge

Housing Minister Clare O’Neil has hit back at criticism government stimulus aimed to give first-home buyers a leg-up into the property market has lifted house prices in October.

Shadow Housing Minister Andrew Bragg on Wednesday accused the government of “recklessly raising of house prices” after they surged in October to their highest rate in more than two years.

It came after Albanese Government changes to its five per cent deposit scheme — which includes removing income limits and raised property price caps — came into effect on October 1.

According to the latest Cotality data, national home values rose 1.1 per cent last month, with house prices in the Perth metro area surging 1.9 per cent.

But data released by Labor on Wednesday evening showed the scheme had helped 5778 first-home buyers in October — a marked jump from the 3901 guarantees issued in October 2024 under the previous system.

The government believes because this is just 10 per cent of average monthly residential property sales, the deposit guarantee scheme will only have a minor impact on prices. Treasury modelling has estimated it would push up prices 0.6 per cent over six years.

Under the guarantees issued through the scheme since October 1, the median purchase price was $710,000.

“The 5 per cent deposit scheme has led to a massive increase in house prices,” Mr Bragg told reporters in Canberra on Wednesday.

“The Prime Minister said that the Treasury advice was that there would be a 0.5 per cent increase in house prices — I assume annualised.

“What we’ve seen in the first month is more than 1 per cent increase — the biggest leap in entry level house prices in years.”

The Cotality report had noted pressure on housing demand around the lower to middle price points of the market, which is where most first-time buyers are looking.

“It is the broad middle and lower quartile of the market where gains are strongest,” the research firm said.

The firm pointed to Reserve Bank of Australia data showing housing credit for investors had been rising at the fastest pace since June 2015, predicting a tightening of lending polices should this trend accelerate further.

It also highlighted that the imbalance between housing demand and supply would likely to persist for a while yet, with dwelling commencements and completions well below the decade average in recent months.

But Ms O’Neil argued the changes were about helping first home buyers get into homes sooner thus saving them in the long run as the government worked to address “a housing crisis that has been building 40 years”.

“After a decade of neglect, our government has built the most ambitious housing agenda,” she told Question Time on Wednesday.

“We made a promise to first home buyers that we would help them and that’s exactly what we’re doing.”

“I’m really happy that 5778 first homes were bought with support from the Albanese Government in October.”

The Government have claimed the expansion of the scheme would provide 20,000 more guarantees than the previous version with annually capped places.

Mr Bragg called for Labor to release the Treasury estimates to back Labor’s previous claims that their changes wouldn’t heavily impact prices.

“In July, the Senate ordered the production of documents in relation to the 5 per cent home guarantee scheme. We expect those documents to be provided,” he said.

He said it would be “a joke” if the Minister didn’t air the data and threatened Opposition would cause headaches if Labor further blocked their calls for transparency.