The global financial body, the IMF, says the housing policy of the Albanese government will primarily serve to drive house prices too high!

Australia has a housing problem that has the IMF calling out the Albanese Government for its 5% deposit policy to allow first homebuyers into the property market. And while it sounds like a caring policy, the global financial body says it will primarily serve to drive house prices too high.

Meanwhile, the AFR’s Lea Jurkovic informs us that the Centre for Independent Studies (CIS) chief economist Peter Tulip thinks that this warning is too late! He thinks it’s already happening.

Let’s recap on what this policy offers:

1. First homebuyers can buy a home with a 5% deposit.
2. They can avoid lender’s mortgage insurance because the Government effectively goes guarantor.
3. Last year, before an election, caps were removed on the number of loans made available.
4. Income caps on borrowers were also removed.
5. The price threshold on properties was raised making more homes buyable by first homebuyers.

Apart from saying Labor’s policy is going to contribute to price increases (and therefore inflation as well), it argues an “holistic strategy” is needed including addressing our housing supply problem.

A spokesperson for Housing Minister Clare O’Neil says the IMF and CIS are wrong, with Treasury modelling only seeing a 0.6% increase in house prices over six years.

House price expert Cotality disagrees with Jurkovic reporting that this research business has found that “the price of eligible homes below the scheme’s price caps had grown 3.6 per cent in the last three months of 2025, outstripping the 2.4 per cent growth seen in houses too expensive for the scheme.”

Believe it or not, but Treasury has only modelled the effect over six years. It hasn’t done the modelling for the short term when first homebuyers are buying properties and inflation is high, right now.

Thank you Treasury…for nothing!

Peter Tulip sensibly argues that the Government should get real on solving our house price problem by “relaxing zoning and building restrictions and expediting approvals for housing developments.”

To make that happen we would need to see a leader with real strength and determination. But I can’t see that on either side of the aisle in Federal Parliament with our major parties.