The re-elected federal Labor Government's housing promises will super charge the property market predicts KR Peter Directors Peter Nicolls and Ian Harris.
However, they also doubt that promised housing targets will be reached saying it will "bloody hard".
During the election campaign Labor unveiled three signature housing policies:
* $10 billion to fund 100,000 homes exclusively for first home buyers
* An expansion of the 5% deposit co-ownership schemes and
* $78 million to qualify 6000 tradies via a fast-tracked skills program
Other commitments included $54 million for prefab/modular home manufacturing and $120 million to help states cut red tape.
Mr Nicolls said "lots of money was thrown at housing" by both major parties but now the market has clarity on where federal government support will flow after Labor's decisive election win.
He is sceptical however, that the Albanese government can deliver on its promise of building 100,000 new homes, saying the $10 billion commitment doesn't add up.
"If you do your sums and divide $10 billion by 100,000 that works out to $100,000 a home. On those figures there will never be 100,000 homes, at best there will 30,000 homes," he said.
Australian Bureau of Statistics data reveals it now costs $517,000 to build an average home in Victoria. This is an alarming rise from March 2020 when the cost was $363,000.
According to Labor's election pitch it will work with the states from July to identify where the homes reserved for first home buyers should be located. They predict building the homes will take 8 years.
Mr Nicolls says governments are also hamstrung by the time it takes building approvals to clear local and state government red tape.
"The time to build is taking so much longer because of all the red tape builders and developers face going through all the relevant authorities. They won't be able to produce the product, but none of this was talked about during the election."
However, it is the other major plank of Labor's housing platform - expansion of the universal 5% deposit scheme - the KR Peters Directors believe will have the biggest impact on demand and prices.
From January 2026 the 'Home Guarantee Scheme' will be open to all Australians buying their first home when income cap and participant limits are scrapped.
Buyers will need just a 5% deposit, eliminating the need for Lenders Mortgage Insurance which costs the average buyer more than $20,000.
Mr Nicolls predicts a rush on applications for the 'Home Guarantee Scheme' as well as the 'Help to Buy' shared equity scheme under which the government takes a 30 per cent stake in existing homes and a 40 cent share of new homes. The government owns part of the property and is reimbursed over time or when the house is sold. The government expanded the scheme in the March budget raising both the income cap and the price cap.
Mr Harris believes the expanded 'Help to Buy' scheme will encourage people to "buy a house for 40 per cent more than they have been approved for" especially those purchasing at the lower end of the market.
"A $700,000 townhouse in Knox will soon be going for $800,000 because of demand for that kind of product," Mr Harris warned.
He predicts there will be people "ready to jump in straight away" when changes to both schemes are implemented.
"A lot of people who may have sold previously and who are renting can utilise this scheme now and pay a mortgage in line with or less than what they were paying in rent."
Mr Nicolls said in his experience very few people buying through KR Peters have taken advantage of either scheme, and those who did were often new immigrants.
"But now the penny will drop and I predict people will rush these schemes and create a frenzy," he said.
'Help to Buy' has a participant limit of 10,000 a year for four years and places could be "exhausted in as little as three months if people jump all over it" said Mr Harris.
They both agree the government investment promised will "kick start the property market".
"Developers will be able to move properties and the market will rise again. I think it is a great thing for buyers. It will super charge the housing industry," said Mr Nicolls.
"Buyers can genuinely try to save for a deposit and be fast tracked into the market and not have to pay mortgage insurance."
However he warned that buyers should still factor in hefty Stamp Duty costs on top of their deposit and mortgage repayments unless "they purchase off the plan with no progress payments."
Mr Nicolls also welcomed Labor's commitment of $78 million to qualify 6000 tradies via a fast-tracked skills program.
The Advanced Entry Trades Training program is designed to help experienced but unqualified workers get the qualifications and recognition they deserve for their work.
The fast-tracked training program builds on the government's $10,000 incentives for new apprentices. From 1 July apprentices will be offered $10,000 in incentives to take up apprenticeships in housing construction.
Research from Master Builders Australia shows that for every new qualified tradie, an extra 2.4 houses will be built each year.
"This is a great concept however it will not come to fruition for three to four years," said Mr Nicolls.
"The industry needs more qualified tradies right now."
Mr Nicolls hopes the government succeeds in its ambitious targets but looking ahead three years sees "a mess" unless significant changes are made to streamline planning procedures.
"The only way this will have a happy outcome is if they can streamline the procedures, fast-track the permits and also fast-track the council and the utility companies. If that doesn't happen I can't see a rosy outcome."
To discuss any topics covered in this blog contact the team at KR Peters Officer on 5943 1111 or Wantirna 9800 0000