Gov. home loan handouts will likely make houses more, not less expensive

Both Labor and Liberal Parties have committed to schemes that will likely cause the cost of housing to go up, not down.

Today the Liberals announced they would offer loan guarantees such that first-home buyers could buy houses with only 5% of the deposit without having to pay for borrower's insurance. Labor quickly followed suit.

Removing the cost constraint of deposits and first home buyer insurance won't make housing cheaper. It will only drive up prices through increased demand; with more people able to afford the deposit, more hands will rise at auctions.
 
The scheme also has serious negative consequences for the stability of our banking system. Depositors insurance acts as a financial deterrent for people who can't afford the repayments on a home from getting in over their head in the first place.
 
For some households, this government hand up could be pulling them up the wealth ladder, but it could also leave them high and dry, teetering on the edge of bankruptcy and losing the very home they borrowed heavily to attain.
 
The Science Party has a different plan. We want to remove the tax distortions that make housing a vehicle for tax minimisation. We'll replace the 50% Capital Gains Tax discount with a discount rate that scales with the Consumer Price Index. 
 
We'll also build more cities, build more rail lines and build more housing near those train stations to ensure more people have the ability to buy and rent houses in areas that have good access to services. 
 
Help us achieve it. Like and share this article if you would like to see our plan happen.
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