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Housing becomes an election debate, but more thought would have been good

TIGHT SQUEEZE: With inflation taking hold, but house prices at absolute record levels, especially when measured against average earnings, the major parties are tinkering with housing policy, but little if anything more.

It's been a long time coming but the government and the opposition are finally having a genuine debate over a key election issue.

This follows weeks of "me too" announcements by the Opposition Leader almost every time the Coalition unveiled a new initiative.

The housing policy disagreement mirrors the traditional ideological divide between the conservatives and the ALP; something we have not seen a lot of during this campaign.

Labor, the party of bigger government, national initiatives such as Medicare, the Superannuation Guarantee, and the NDIS, thinks the best way to make housing more affordable is to invest more in social housing, to expand the first home buyers deposit guarantee scheme, and to offer to use taxpayers' money to acquire equity in eligible first home purchases.

It remains to be seen whether these measures, commendable as they may sound on paper, have sufficient wind beneath their wings to fulfil the extravagant claims being made on their behalf.

The Liberals have gone down a significantly different path and one that the Prime Minister has been at pains to point out Labor would not, and could not, ever copycat.

This proposal, released at Sunday's Liberal campaign launch, is much more laissez faire.

It wants to let first home buyers use 40 per cent or $50,000 of their superannuation - whichever is the lesser amount - as part of their deposit.

This also sounds appealing on paper.

It would arguably have the capacity to let hundreds of thousands of people get into their first home years sooner.

And, joy of joys, it wouldn't cost the taxpayer a cent.

People would be spending their own money or, as Mr Morrison succinctly put it: "it's your super, it's your house".

The LNP, which is also committed to more social housing and the first home buyers deposit guarantee scheme, married its policy to a pledge to lower the age at which downsizers can tip up to $300,000 from the sale of their former home into their super to 55.

It argues this would free up under-utilised family housing for younger buyers. This proposal has been embraced by the ALP.

While superficially appealing, the super into equity proposal appears to have as many cons as pros.

The biggie is that property prices are determined by the laws of supply and demand.

If you fuel the demand without adding to the supply, which giving potentially hundreds of thousands of people access to the housing market at once by allowing them to access their super for their deposit would do, then of course prices will go up.

Or, to put it more simply, if this is such a good idea then why hasn't this government done it long ago? It has rejected it out of hand previously.

The proposal could only work for an economically astute couple, both in stable and well paying jobs and with healthy super balances.

There is nothing here for those in the gig economy, on part-time work, or living from hand to mouth on the basic wage.

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DESIRABLE DESPITE THE COST: Fear of missing out is a continual driver in the housing market. Picture: Elesa Kurtz