5% deposit scheme and house prices

Question

? What is the Budget / fiscal cost of the 5% scheme? ? What is the estimated total Commonwealth contingent liability under the scheme over the forward estimates? Beyond? ? Are there any documents or Treasury modelling that considers the contingent liability to taxpayers? Is taxpayer risk is being transparently reported? ? Do you have any understanding of how that may be viewed in the context of our national credit rating? ? What does the government's own modelling show about the 5% scheme's effect on prices? ? Cotality says price impact has been 6.7% for eligible properties in 6 months, far more than the 0.6% Treasury modelling. ? What's the latest on the price impact of the 5% scheme? What is the latest modelling on this? When was it done? Is it more than the 0.6% medium-term impact? ? Was modelling conducted before the 5% scheme was expanded to non-citizens? Has the Government ever requested new modelling be conducted? ? Is it wise to increase housing demand through the 5% deposit while increasing taxes that will reduce housing supply? ? Does the government accept that when you subsidise borrowing without fixing supply, part of the benefit is capitalised into higher prices for existing owners? ? Can you share Treasury's modelling on market impacts of your uncapped unlimited scheme? ? Are you aware of the extent of the impact your uncapped unlimited scheme had on prices for that first home buyer cohort? ? Budget paper 1 claims ''This reduced demand will likely lead to a modest and temporary slowing in housing price growth that improves affordability. Treasury modelling suggests housing prices will temporarily grow by around 2 per cent less over a couple of years relative to no tax policy change.'' BP1, p158. ? When you fuel demand and constrain supply how do you expect price growth to moderate? ? The changes in the Budget have already impacted the market - with reports that auction clearance rates in some areas have plummeted to below 50%. ? How are first home buyers that were encouraged to buy last year under the uncapped 5% deposit scheme are faring? ? How do you expect the recent interest rate rise to impact HGS participants? Has there been any work on different income groups? Or those who may be more vulnerable to a rate rise? ? What modelling has the government done on repayment stress for scheme participants if interest rates stay higher for longer? ? Have you done any modelling on this issue? ? In relation to the expansion of the Home Guarantee Scheme on 1 October 2025: ? What is the projected impact on dwelling prices? ? Was this price impact modelled prior to the policy decision? ? If yes, please provide the modelling document? ? How many lower-income first home buyers who would have qualified under the original targeted scheme are now being crowded out by higher-income buyers after the expansion?

Answer

See attached response.

Documents

• Question with answer (PDF) (opens in a new tab)
• SQ26-000247 5- deposit scheme and house prices.pdf (opens in a new tab)