As Australia heads towards the federal election by May 17, 2025, the housing market has become a central battleground. For countless Australians, the dream of homeownership or even securing a stable rental feels more distant than ever. Record-low affordability and soaring rents are not just statistics; they are daily realities causing significant stress for households nationwide. This article cuts through the political noise to provide a clear analysis of the two core issues shaping the debate: housing affordability and supply. We'll break down the major parties' proposed solutions and explore what they could mean for your property journey.

The Core Issue: A National Affordability Crisis

The data paints a stark picture of the challenges facing Australians. Housing affordability is at its most critical point since records began in 1995, while rental affordability is the worst it has been since 2008. These pressures are felt in every corner of the country, creating a difficult environment for buyers and renters alike.

Buyer Affordability at Historic Lows

According to recent analysis, a typical income household in Australia can now afford just 14% of homes sold in the past year—the lowest level on record. This dramatic decline is driven by two primary factors:

• Interest Rate Hikes: Since the last election in 2022, the cash rate set by the Reserve Bank of Australia (RBA) has climbed significantly. Mortgage rates have surged from under 2% in late 2021 to an average of over 6.2% today, drastically reducing borrowing capacity for prospective buyers.

• Persistent Price Growth: While interest rates are a major part of the story, home prices have also continued to rise, particularly in cities like Perth, Adelaide, and Brisbane, further widening the gap between incomes and property values.

The Unprecedented Rental Squeeze

The rental market has experienced enormous pressure, with rent prices increasing at a staggering rate since the pandemic. For a typical income household, the proportion of rentals they can afford has plummeted from 60% before the last election to just 39% today.

Consider these figures since March 2020:

• Perth: Rents are up an incredible 80%.

• Brisbane: Rents have surged by 58%.

• Sydney: Rents have increased by 46%.

• Melbourne: Rents have climbed by 34%.

This crisis is no longer confined to the major capitals; it's a nationwide phenomenon. To understand how these trends impact your specific area, leveraging detailed real estate analytics is more important than ever to identify market-specific conditions.

Policy Battleground: Tackling the Affordability Challenge

With voters feeling the pinch, the major political parties are proposing different demand-side solutions to help Australians enter the property market. Here’s a breakdown of the key policies.

Coalition: Super for Housing

The Coalition is proposing a policy that would allow first home buyers to access up to 40% of their superannuation, capped at $50,000, to purchase a home.

• The Pros: Supporters argue it empowers Australians to use their own savings to secure a home and avoid the financial instability of renting in retirement.

• The Cons: Critics raise concerns about the long-term impact on retirement savings and the potential for the policy to inflate property prices by injecting more cash into the market.

Labor: Help to Buy Scheme

The current government's flagship policy is the Help to Buy scheme, a shared equity program. The government would contribute up to 40% of the purchase price for a new home (or 30% for an existing one), which the home buyer would repay upon selling the property.

• The Pros: This significantly reduces the deposit hurdle and mortgage size for eligible buyers, targeting those who have struggled to save in a high-cost environment.

• The Cons: Critics question the long-term cost to taxpayers and the philosophical implications of the government taking an ownership stake in private homes.

Bipartisan Support: The Home Guarantee Scheme

One area of agreement is the Home Guarantee Scheme. Originally introduced by the Coalition and expanded by Labor, this scheme allows eligible buyers to purchase a home with a deposit as small as 5% without paying Lenders Mortgage Insurance (LMI). It has proven popular and effective in helping people overcome the initial deposit barrier.

Navigating these schemes requires careful planning. An AI Buyer's Agent can help you understand your eligibility and structure your finances to take advantage of the best available support.

The Long Game: Confronting the Housing Supply Shortage

While affordability schemes dominate headlines, economists and industry experts agree that the only sustainable, long-term solution is to build more homes. Unfortunately, Australia is falling well behind its targets.

The country is currently building around 175,000 new homes per year, a significant drop from the 220,000 built annually in the late 2010s. This is far short of the National Cabinet's target of 1.2 million new homes over five years, which requires a rate of 240,000 per year. The construction industry faces major headwinds, including a 50% increase in the time it takes to build a standard house (from six months to nine) and soaring material costs.

How the Parties Plan to Boost Supply

• Labor: The government has established the $10 billion Housing Australia Future Fund (HAFF), which aims to fund the construction of 30,000 new social and affordable homes over five years.

• The Coalition: Their strategy focuses on investing $5 billion in essential infrastructure (water, power, sewage) to unlock new land for development. They also propose reducing permanent migration to ease immediate demand on the housing market.

• The Greens: Proposing an ambitious plan to create a public property developer to build 360,000 public homes over five years, though the Parliamentary Budget Office has estimated this could cost upwards of $40 billion.

Effective change requires a coordinated effort between federal, state, and local governments, as planning and zoning laws, which are controlled at the state and local levels, are a major bottleneck. Population growth, as tracked by the Australian Bureau of Statistics, continues to put pressure on existing housing stock, highlighting the urgency of these supply-side reforms.

Conclusion: Navigating the Path Forward

The 2025 federal election places housing at a critical juncture. While demand-side policies like Super for Housing and Help to Buy offer potential pathways to ownership for some, they don't address the fundamental imbalance in the market. The real, lasting solution lies in a sustained, multi-government commitment to increasing housing supply.

For buyers, sellers, and renters, the lead-up to the election may bring a period of uncertainty as people wait for policy clarity. However, the underlying market dynamics of high demand and low supply are unlikely to change overnight. The key is to stay informed, understand the data, and make decisions based on your personal circumstances and long-term goals.

In a market driven by complex data and shifting policies, making an informed decision is paramount. Explore HouseSeeker's real estate analytics platform to cut through the noise and identify opportunities based on hard data, not just headlines.

Frequently Asked Questions

Will the election make houses cheaper?

It's unlikely in the short term. Demand-side policies, which give buyers more money to spend, could potentially place upward pressure on prices if supply doesn't increase to match. Supply-side solutions will take many years to have a noticeable impact on prices.

Should I wait until after the election to buy a property?

This depends entirely on your personal and financial situation. Waiting may provide clarity on which government assistance schemes will be available, but there's no guarantee market conditions will be more favourable. Using an AI Property Search tool can help you monitor the market and identify suitable properties regardless of the political climate.

Which government policy is best for first home buyers?

Each policy has distinct advantages and disadvantages. The Coalition's Super for Housing plan allows you to use your own savings but may impact your retirement. Labor's Help to Buy scheme lowers your deposit and mortgage but involves government co-ownership. The Home Guarantee Scheme is widely supported and is an excellent way to avoid LMI but doesn't provide direct funds for a deposit.