US government shutdown looms as funding talks stall
Across the Pacific, American politics dominates headlines as the US moves toward a possible government shutdown amid funding negotiations. While Australia’s policy conversations focus on housing, the unfolding impasse in Washington underscores how fiscal and political pressures can ripple across markets and policymaking. In Australia, observers are watching domestic plans closely while noting that global events can shape risk assessments and investor sentiment.
Labor expands the 5% deposit scheme: what changes now?
The Labor government’s expansion of its 5 per cent deposit scheme for first-home buyers is the centerpiece of a broader push to widen homeownership. The policy, framed by critics as a response to affordability concerns and housing supply targets, comes as the government reiterates as part of its housing agenda that it aims to support more Australians into ownership while balancing fiscal responsibilities.
Officials have pointed to the policy’s 1.2 million homes-by-2029 objective as a long-term aim that would require complementary supply and support measures. Supporters argue the scheme lowers the barrier to entry in a market where upfront costs have long deterred many young buyers. Critics, however, warn that expanding guarantees and deposits could lift asking prices or push mortgage risk into the system if demand outstrips supply.
Treasury modelling and the government’s price projections
Prime Minister Anthony Albanese has cited Treasury modelling predicting a small uplift in prices, with the modelling indicating roughly a 0.5 per cent increase in house prices over six years. The government says the modest rise is a trade-off for greater home ownership access and broader economic stability. In contrast, the Insurance Council of Australia has forecast a more pronounced shift, suggesting prices could rise by as much as 10 per cent in a single year under certain scenarios. These divergent forecasts reflect the uncertainties that come with policy shifts in housing markets.
Reaction from the opposition and policy critics
Former deputy prime minister and Nationals MP Michael McCormack has been among the most vocal critics of the policy expansion. He described housing under the Labor government as a “disaster situation,” arguing that the current suite of policies risks pushing costs higher and making it harder for young Australians to secure their first home. “The Prime Minister, himself, said that it’s going to push up house prices. I mean, how far is it going to push them up?” McCormack said on Sky, highlighting concerns that affordability could deteriorate as a result of the policy changes.
McCormack’s assessment reflects broader concern among some rural and regional MPs that the policy mix could burden households already stretched by rising living costs. He insisted that even with a stated goal of expanding homeownership, the net effect could be less about enabling entry and more about reshaping the market’s price floor in ways that leave some buyers worse off.
Implications for first-home buyers and the market
Supporters of the policy say expanded access helps ordinary Australians climb the property ladder in a market that has long been challenging for first-time buyers. The 5 per cent deposit framework is designed to reduce the upfront cash barrier and lower monthly repayments where possible, creating a clearer pathway toward ownership for eligible applicants.
However, the policy sits within a broader housing strategy that includes supply-side goals and cost-of-living measures. If supply improves and demand remains steady, the overall impact could be balanced. If demand surges without commensurate supply, price pressures could intensify, which is precisely what Treasury and market analysts are monitoring. The competing forecasts—0.5 per cent versus a much larger one-year rise—underscore the delicate balance policymakers must strike between access and affordability.
What happens next?
As the policy takes effect, observers will be watching housing starts, mortgage approvals, and regional price indicators to gauge early effects. The government is likely to face ongoing questions about how the deposit scheme interacts with lending standards, construction activity, and the broader cost-of-living landscape. For prospective buyers, the key remains the ongoing availability of finance, the pace of supply growth, and the evolution of interest rates.
In other headlines, the day’s news cycle also included reports on international developments and entertainment industry moves, such as Nicole Kidman’s reported divorce filing, which sit on the periphery of the housing policy debate but remind readers that global and domestic narratives continue to unfold in parallel.
