EMBARGO: 5.00 PM_
FOR MEDIA SUNDAY, 21 IARCH 1982
ELECTORATE TALK
The housing policy package announced by the Treasurer, John
Howard, last Thursday confirms the Government's concern for
the objective of home ownership. Inabed it is under Liberal
Governments in the post-war period that the dream of home
ownership has become a reality for the great majority of
Australian households. Today almost 72% of Australian households
own or are buying their own home, compared to around 50
in the late 1940s. Among young adults, the improverents. in
home ownership prospects has been even more dramatic. In
the 25-34 year old age group, the proportion buying or
purchasing their own homes has increased from less than 37%
in the late 1940s to over
For the great majority of people-' the purchase of a home is
the biggest, and probably the most complex purchase they make.
It involves saving for a deposit, for furniture and fittings
it involves dealing with banks or building societies, with
agents and solicitors, and it involves a commitment to spend
the equivalent of several years of their annual income.
They are prepared to do all of this because they recognise
that they are not only acquiring an asset of great value
in itself, but also providing for themselves and their families
a basis of security and stability.
Achievement of the goal'of home ownership has never been easy,
and in various ways over the years governments have assisted
and encouraged the growth in the level of home ownership.
In recent times,. for a variety of reasons, the intending
home buyer has faced increasing difficulty. Much of the
discussion of these problems has focused on interest rates,
but while interest rate increases have undeniably played
a part, iL would be wrong to say that they have been the only,
or even the most fundamental problem. Indeed for anyone who
started to buy a home four or five years ago or more, the
burden of meeting their repayments has declined significantly
despite the increases in interest rates that have subsequently
occurred. Many of the difficulties faced by more recent homebuyers, and
by those now wanting to buy their first home have arisen from
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the pressure of costs on house prices. Increases in the
price of land and increases-in the cost of. home building are
in part a consequence of overall inflationary trends which can
only be addressed by continued firm economic policies. But
the costs imposed by building regulations and servicing
costs have also posed very material problems for many home
buyers,. and state and local governments have a real responsibility
to examine very closely their policies in these areas where
they add to the ultimate cost of housing.
There can, be no doubt, however, that the current world
environment of high interest rates.-from which the AustraliaLn
economy cannot realistically be insulated has also made a
significant contribution towards difficulties which have
arisen in the housing area. With institutions such as savings
banks constrained in terms of what interest rates they can offer
on deposits, household savers have tended to shift their deposits
to other areas,-and the funds available to home buyers from
the traditional home lending institutions have diminished,
leaving many people unable to borrow, or forcing them to seek
additional funds from other more costly sources.
The package of measures announced by the Treasurer faces up
to these realities, and concentrates assistance on those who
really are in need.., It increases the availability of housing
finance to new borrowers through the banks, which have guaranteed
an extra $ 400 million on top of their normal lending in the
next 12 months for housing loans. That represents over 12,000
additional loans. It provides increased assistance, and
more timely assistance, to families with ~ modest incomes
saving to buy their first home, through a modified home
savings grant scheme, which will help over 40,000 home buyers
each year.
It provides assistance in meeting increased repayment burdens
through a tax rebate scheme for over 450,000 home buyers who
first entered home ownership in the last five years, and
will provide similar assistance to all new first home buyers
in the future. It provides additional assistance io all home buyers iwho
took out loans from the nationally operating banks in the last
two years, through an agreement with the banks that they will
defer increased repayments for those borrowers for two years
if they wish, and the banks have agreed to develop special
arrangements, including low start mortgages, to further assist
new first home buyers in the early years of their loans.
And it provides for special assistance through joint arrangements
to be developed with the states, for low income home buyers
and private renters who are facing extreme difficulty and
hardship in meeting their housing costs.
A't the same time we have realistically faced up to the problem
that the nationally operated banks and savings banks have faced
in paying for deposits to allow them to make more loans by
allowing them to raise interest rates on home loans by 1
percentage point to 13! Even on this level their home
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lending rate is no higher than that charged on substantial
housing loans by building societies in any state, and is lower
than in most. It is worth noting that the building societies
and their rates are under the legislative ' authority of state
governments, not of the Commonwealth. For those who
bought their first home with the aid of a loan from a bank in the
last five years, the cost of the higher interest rate will be
offset by the new tax rebate available to them, and almost half
of all borrowers from the banks will be offered the
choice of deferring any consequential increase in their
repayments for two years.
The new deal that has been given to recent and prospective
home buyers puts beyond doubt the Commonwealth Government's
commitment to home ownership. Here in Victoria, Premier
Lindsay Thompson and Housing Minister Jeff Kennett have
welcomed the Commonwealth Government's package which
they estimate will assist scme 175,000 Victorian families,
and they have added to it a housing subsidy scheme of their
own to assist all other family home buyers in the State of
Victoria. I am sure that allhome buyers in Victoria will
welcome their imaginative commitment.