From the AHURI Inquiry: Financing first home ownership: opportunities and challenges

This research reviewed first homebuyer (FHB) assistance programs in Australia and seven comparator countries: Canada, Finland, Germany, Ireland, the Netherlands, Singapore and the UK. It considered to what degree such assistance are effective in expanding access to home ownership to those whose entry would be otherwise delayed or impossible, or in making more affordable and less risky the cost of home ownership.

Current Australian first homebuyer assistance measures primarily act to bring forward first home purchase for households already close to doing so, rather than opening home-ownership access to households otherwise excluded. In doing so, these measures add to demand and hence to house prices. An ‘effective’ FHB-assistance mechanism or instrument is one that can be credited with ‘additionality’, as it makes first home ownership possible for people who would be otherwise excluded or—in fact far more likely—significantly accelerates access to owner-occupation. An ‘efficient’ initiative is one that is effective at an acceptably modest unit cost and with minimum administrative complexity.

FHB interventions can be demand-side or supply side measures. A demand-side intervention involves a benefit directly received by the consumer, effectively boosting FHB-purchasing power, and include homebuyer grants and tax concessions, low-deposit mortgage products and shared equity arrangements). Supply-side interventions directly relate to the provision or use of housing; this covers the disposal of government-owned assets, funding channelled through property developers or suppliers, and regulatory instruments that affect housing production or use of housing assets.

The eight countries assessed have substantial diversity in terms of policy approaches to supporting home ownership; supply-side approaches are more common in a number of comparator countries. Australia stands out as it is overwhelmingly reliant on demand-side instruments and lacks a strategic framework.