As the 2025 federal election approaches, both Labor and the Coalition have announced major housing policies aimed at improving home ownership.

Moves that could significantly influence residential mortgage lending across Australia.

The Coalition, under Peter Dutton, is proposing a targeted tax deduction for first-home buyers purchasing new builds.

Eligible buyers, means-tested at $175,000 for singles and $250,000 for couples, would be able to claim a tax deduction on interest paid on the first $650,000 of their mortgage for up to five years.

The initiative is expected to cost $1.25 billion and could support increased lending activity in the new housing sector.

In contrast, the Albanese Government’s approach focuses on broadening access to the housing market.

Labor plans to expand the First Home Buyer Guarantee, removing income thresholds and increasing property price caps (e.g. Sydney: up to $1.5 million), effectively widening the borrower pool.

Additionally, a $10 billion investment will support the construction of 100,000 new homes for first-home buyers, $2 billion in grants and $8 billion in interest-free loans.

These homes are to be built on underutilised government land in partnership with state governments.

Both policies aim to improve affordability and access, but via distinct mechanisms, either through tax-based incentives or supply-driven investment.