The Senate has voted to kick off an inquiry examining the impact of Australia’s financial regulations on home ownership, with a focus on improving access for first-time buyers.
Led by Senator Andrew Bragg, the Senate economics references committee will investigate ways to reduce lending costs and enhance accessibility for those entering the property market.
Senator Bragg said the inquiry aims to explore options that could tilt the scales in favour of first home buyers and will look at lending practices by banks and private credit providers.
The committee intends to investigate opportunities for deregulation and consider how eligibility barriers, such as Higher Education Contribution Scheme (HECS) debts, might be lessened for first home finance applicants.
“Australians must be able to have access to a mortgage as a prerequisite for a first home,” Senator Bragg said.
The inquiry will consult with industry stakeholders, the Australian public, and the Australian Prudential Regulation Authority (APRA).
Senator Bragg said the probe was an effort to get financial institutions to better serve individuals.
“If the average working Australian loses access to capital for a mortgage to fund their family home, this will cement the intergenerational divide and destroy the Australian dream,” Senator Bragg said.
Real Estate Institute of Australia (REIA) President Leanne Pilkington said the enquiry is a step in the right direction.
“Anything the government can do to help get first home buyers into the market would be fantastic,” Ms Pilkington said.
“It’s going to be an election issue so I’m confident that both parties are going to have to do something more concrete to address the concerns.”
Ms Pilkington said one area that needs to be addressed is the fact that lenders are forced to apply a serviceability buffer that is preventing many from entering the market.
“One of the problems with the banks at the moment is that you’ve got to be able to service 3 per cent above the cash rate, which is incredibly unlikely with all the price increases we’ve seen,” she said.
“There’s certainly a lot of areas that the government needs to be looking at, but one of the problems is they are just not achieving any of the things they’ve talked about.”
HIA managing director Jocelyn Martin said the enquiry was “long overdue” and that access to finance for a deposit remains the biggest obstacle for Australians trying to buy their first home, especially those paying rent while saving.
“Over the last two decades the rate of home ownership has declined and is at worrying levels,” Ms Martin said.
“This is particularly concerning for those under 40, with the homeownership rate of 30-34 year old’s currently less than 50 per cent and those aged 25-29 just 36 per cent.
“This reinforces that it has become increasingly difficult, if not impossible in most circumstances, for young Australians to get into home ownership.”
She said Australia needs to have appropriate and proportional financial and lending regulations that look to support not impede people to access finance for housing and home ownership.
“We are looking for this Inquiry to identify those financial and regulatory impediments that are holding back young Australians and identify new measures to ensure that home ownership can remain an achievable goal for everyday Australians,” Ms Martin said.
