Australian first homebuyer grants and concessions may have done more to benefit existing homeowners rather than help first time buyers enter the market, a new report has found.

The study by the Australian Housing and Urban Research Institute (AHURI) found that government schemes aimed at helping more Australians onto the property ladder actually helped to push up property prices, making homeownership less affordable.

The schemes, costing billions of dollars in taxpayer money, were found to benefit households already in a position to buy by bringing forward purchasing and making demand even greater.

First homebuyers have faced soaring property prices over the past decade.

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In contrast, households with limited access to home ownership were further excluded as competition from buyers pushed up property prices and made housing less affordable.

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This comes as the deposit hurdle faced by first time buyers reaches a new high, with new purchasers facing the least affordable upfront costs since 1984, according to PropTrack.

Australian governments spent more than $20.5bn supporting first homebuyers in the decade to 2021 through first homebuyer grants, stamp duty concessions and other cash grants.

Australian governments have done little to increase housing supply. Picture: Nikki Davis-Jones

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In the four years leading up to the pandemic, government spending increased from $1.2bn in 2016 to almost $3bn in 2020.

The study compared first homebuyer programs in Australia with those in Canada, Finland, Germany, Ireland, the Netherlands, Singapore and the UK.

In contrast to government programs in these countries, Australian programs lacked measures to increase housing supply alongside the grants and concessions on offer, which added to the demand pressures first time buyers were already facing.

It is becoming more difficult for young families to afford a home.

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Author of the report, Dr Chris Martin of UNSW City Futures Research Centre, said Australian policy “lacked a strategic framework.”

“Unlike countries such as Finland and Singapore, Australian governments have

resisted prioritising first homebuyers’ genuine interests by reforming tax settings that favour

their housing market competitors: established homeowners and would-be rental investors,” Dr Martin said.

First homebuyer grants have increased demand from buyers. Picture: David Swift

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“Current Australian first homebuyer assistance measures primarily act to bring forward first

home purchase for households already close to doing so, rather than opening home ownership access to households otherwise excluded.”

“These measures simply add to demand and push up property prices.”

The report identified four supply-side models that Australian governments could consider:

build to rent to buy; land rent schemes; private developer contributions to homes for cut-price sale; and the government acting as a housing developer of cost-price homes.

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