How Labor and LNP pitches to first home buyers compare

Two campaign launches, two different housing policies targeted directly at Australians hoping to take their first step onto the property ladder.

Both the Labor government and the Coalition spent the weekend making fresh policy announcements they say will make it easier for everyday Australians to purchase their first home, setting up a direct contest over housing ahead of the 3 May federal election.

But while the major parties have the same stated goal – making homeownership easier and more affordable, the path they have chosen to get there is very different.

The ALP’s Plan

Vowing to be “the prime minister who restores the dream of home ownership”, Peter Dutton has vowed to allow first time buyers of newly built homes to deduct part of the interest paid on their mortgage from their income taxes if he is elected.

Access to the “first home buyers mortgage deduction scheme”, as it has been called, is limited to five years and participants would only be able to claim back the interest paid on the first $650,000 of their mortgage.

The scheme will only apply when the property in question is a new build — meaning no one has lived in it previously — a detail the Coalition claims will boost construction activity and housing supply.

It would cost the budget $1.25b over the first four years and be limited to singles earning up to $175,000, and couples earning up to $250,000.

Leader of the opposition Peter Dutton is hoping is housing proposals will sway voters at the polls. Picture: News Corp Australia

Those eligible will also have to live in the home, meaning the scheme will not apply to first time investors.

“I will never accept a situation in our country where the only people who can buy a home are those who can rely on the bank of mum and dad,” Mr Dutton said while addressing the party faithful in south west Sydney.

The Coalition plans to introduce legislation for the scheme within 100 days of being in government, if they win the coming election, and there would be no application process to access it.

At tax time, recipients would claim the additional deductions like they would for other work-related expenses.

With the cost of living and housing being signature concerns of voters, Mr Dutton also announced a $10b commitment in which everyone earning up to $144,000 would receive a one-off income tax refund of up to $1200 after they lodged their 2025-26 tax return.

The tax cut, to be given to ten million workers, or 85% of the workforce, will apply for one year.

The new offset will provide the full rebate of $1200 to those with annual taxable incomes between $48,000 and $104,000.

Those earning below $48,000 and between $104,000 and $144,000 will receive a smaller offset

The proposed tax cut, as well as the $1.25b mortgage tax deductibility promise, would be paid for by axing Labor’s $17b top-up tax cut announced in the federal budget.

Labor’s Plan

A re-elected Labor government, meanwhile, would expand the First Home Buyers Guarantee Scheme – which allows a 5% deposit to purchase, with the government guaranteeing the other 15%— to all first-time buyers.

Participants would not be subject to the lender’s mortgage insurance — as is the case under the current scheme, which costs $23,000 for the average first homebuyer. The change would take effect from 1 January 2026.

Prime minister Anthony Albanese is hoping his party's proposals for first home buyers will be enough to secure him another term. Picture: News Corp Australia

The new policy is expected to benefit around 80,000 first home buyers each year, based on Treasury estimates.

The only restriction would be on the price of the home, which would be capped relative to the average for each city or region, the ABC reports.

In Sydney, the limit would be $1.5m under the new proposal, $950,000 in Melbourne, $1m in Brisbane, $850,000 in Perth, $900,000 in Adelaide, $700,000 in Hobart, $1m in Canberra and $600,000 in Darwin.

In addition to the updated First Home Buyers Guarantee Scheme, Albanese has also promised $10bn in loans and grants to build 100,000 homes over eight years exclusively for first home buyers.

Of this, $2bn would be grants and $8bn would be zero-interest loans or equity investments, with Labor planning to work with the states and territories to identify underused government land to build new homes, while also fast-tracking development applications.

'What the 2025 federal budget means for the housing market': youtube.com/mortgagechoice

However, it is so far unclear who would be able to access the homes – expected to be cheaper than what’s available than those built by the private sector.

According to housing minister Clare O’Neil, it was likely there would be some income test, but the exact criteria would be negotiated state by state.

If re-elected, Labor hopes for a construction commencement in the 2026-27 financial year, with homes complete by the following year.

However, the timeline will ultimately depend on the passage of legislation and the speed at which suitable locations can be identified, meaning the bulk of affordable homes could be close to a decade away.

The expansion First Home Buyers Guarantee, meanwhile, will be implemented on the first day of next year if Labor is re-elected.