For many young Australians, becoming a homeowner is seemingly an impossible milestone.

A surging cost of living and sky high housing prices are only pushing the dream of property ownership further away.

Over the past year, there has been a 2.3 percent increase in Australian workers’ base wages, according to the Australian Bureau of Statistics.

But this annual pay rise falls short of the 5.1 percent jump in the cost of living, recorded by the Consumer Price Index.

With the upcoming federal election, the two major party leaders have pledged to get young Australians into their first home, sooner.

Current Policy Under the Coalition

The current policy has many components – there is a first homeowner Grant and a first homeowner stamp duty exemption or concession.

The First Homeowner Grant is a national scheme funded by each of the state and territories, whereby a one-off grant is payable to first homeowners should they satisfy all of the eligibility criteria.

The First Homeowner Grant is a payment made to the buyer after settlement.

The buyer is still required to have money readily available as a deposit and for the transfer of title.

In Victoria, this is a $10,000 grant for new homes valued at $750,000 or less that have not been previously sold, occupied, or leased.

The first homeowner duty exemption applies for a principal place of residence valued up to $600,000.

Alternatively, there is a duty concession for principal places of residence valued between $750,000-$601,000.

The Coalition also introduced their First Home Guarantee, during their term in office.

Generally, Australian homebuyers are required to save a 20 percent deposit or take out Lender’s Mortgage Insurance, which often costs thousands of dollars.

The First Home Guarantee allows a purchaser to buy a home with just a five percent deposit, without paying lenders mortgage insurance as the Government becomes the loan guarantor.

Labor’s Help to Buy Shared Equity Scheme

Labor have pledged to match this current policy under their Help to Buy shared equity scheme and will also add a shared equity element where it co-purchases the home with the buyer.

This means that a Labor Government will own up to 40% of new homes, or up to 30% of existing homes.

Labor promise that under an Albanese Government purchasers will require a smaller deposit, be able to obtain a smaller mortgage, and have smaller mortgage repayments.

A Labor Government will share with the homeowner the loss on the property should housing prices fall, or the profits should the property increase in value.

A band-aid solution?

Many experts agree these schemes offer a ‘band aid solution’ to the housing crisis in Australia.

Andrew Walter, Professor in International Relations, Social and Political Sciences at the University of Melbourne says a general problem with the schemes proposed by both major political parties is that they tend to increase demand in the market – which then pushes up house prices.

‘It’s not tackling the fundamental problem…it’s essentially reacting to a symptom or like putting a band aid over a much larger problem,’ he says.

Coalition’s Super Home Buyer Scheme

‘It’s your home! And it’s your Super!’ Prime Minister Scott Morrison proclaimed at the Coalition’s campaign launch in Brisbane.

Mr Morrison announced the Coalition’s Super Home Buyer scheme would enable first home buyers to use up to 40 percent of their super, or up to $50,000, towards buying a home.

‘For most people, in practice, allowing them to dip into their super is probably a very theoretical benefit,’ says Professor Walter.

‘It comes with significant risks in that it may lead them to under invest in their retirement – housing equity is not necessarily a good substitute for a diversified retirement portfolio.’

He points to experts saying such policies are not a good idea.

‘It will tend to push up house prices at the margin and cancel out much of the potential benefit…parliamentary committees have advised against exactly this kind of plan in the past for very good reason.’

Dealing with affordability

People looking to buy their first home are often overwhelmed with the cost of buying property, and would love to see prices go down.

But no homeowner wants to lose money on their expensive investment.

Shadow Housing Minister Jason Clare, told the ABC there is no easy fix to making housing more affordable.

‘I don’t think anyone’s proposing that they want to cut the price of housing…if housing prices were to drop, the economic impact for Australia would be phenomenal,’ he says.

Experts believe one solution to housing affordability crisis is to reinvest in the supply of social and affordable housing.

Labor have pledged to set up a fund that will develop roughly 30,000 social housing properties.

‘The key is you have got to increase supply if you want to deal with housing affordability issues,’ Labor leader Anthony Albanese says.

If re-elected the Coalition says it will support greater investment in affordable housing with an additional $2 billion in low-cost financing for social and affordable dwellings.

The Federal Election will take place on Saturday the 21^st of May.