ADJOURNMENT

Senator DEAN SMITH (Western Australia) (19:32): Tonight, I rise to speak about the growing financial pressure facing Australian families and the thousands of young Western Australians that the Albanese government encouraged to take on unprecedented levels of debt through its expanded five per cent home deposit scheme. The cost-of-living crisis is not just about higher grocery bills, rising electricity prices or soaring insurance premiums.

It is also about financial security and whether families can withstand the next economic shock. Unfortunately, Labor has left many Australians dangerously exposed. For generations, homeownership has represented security, stability and the chance to build wealth.

Under this government, though, it is increasingly becoming a financial gamble. Labor's expanded First Home Guarantee scheme allows eligible buyers to purchase a home with as little as a five per cent deposit, or two per cent for eligible single parents, without paying lenders mortgage insurance. It sounds very appealing, but what Labor does not talk about is the risk.

With virtually no equity, even a modest fall in house prices can wipe out a family's savings and leave them owing more than their home is worth. That is called negative equity. New Housing Australia data reveals where those risks are concentrated.

In Western Australia alone, more than 3,000 first home buyers accessed the scheme across greater Perth during 2024-25, with another 161 buyers in regional Western Australia. The highest concentration was in Perth's rapidly growing outer suburbs, including Armadale, Baldivis, Ellenbrook, Kwinana, Gosnells and Success, where many young families bought after one of the strongest housing booms in Western Australia's history.

The median purchase price under the scheme in Perth was $551,000, with a median deposit of just $30,000. At the same time, the average owner-occupier mortgage in Western Australia has climbed to over $700,000 for the first time, increasing from around $457,000 just four years ago. These families are carrying record levels of debt with almost no financial buffer.

Now the market is cooling. REIWA reports that the number of homes for sale is now more than 90 per cent higher than a year ago. Auction clearance rates have fallen sharply.

REIWA says the market has entered a wait-and-see phase. Cotality says the market is losing steam, and Morgan Stanley has forecast a five to 10 per cent correction in house prices, potentially one of the largest in four decades. If that occurs, thousands of buyers who entered the market with only a five per cent deposit could see every dollar of their equity disappear.

Should unemployment, illness, separation or relocation force them to sell, they could be left owing the bank more money after selling their home. That is not financial security; that is financial vulnerability. What makes this even more concerning is that Labor has created contradictory housing policies while simultaneously undermining confidence through changes to negative gearing and capital gains tax.

The result is the worst of both worlds: record household debt, weaker market confidence and greater financial risk for first home buyers. Since the Home Guarantee Scheme commenced in 2020, almost 10,000 loans have been underwritten by Australian taxpayers, including more than 13,700 in Western Australia. That is a sizeable, significant public commitment of taxpayers' dollars.

It should help young Australians build wealth, not expose them to unnecessary financial risk at the peak of the market. Australians deserve housing policies that deal with the real causes of the affordability crisis by increasing supply, reducing construction costs, removing planning bottlenecks and restoring confidence to invest in new housing. The answer is not encouraging young Australians to borrow more while Labor's cost-of-living crisis erodes their purchasing power.

The dream of homeownership should provide security, not become another casualty of Labor's economic mismanagement. Young Australians deserve the opportunity to buy a home without being set up to fail. That requires responsible housing policies that expand supply, not ones that inflate demand by while leaving young families to bear the consequences of greater financial risk tomorrow.