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EMBARGO: 5.00 PM

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P R IM E  M IN IST E R

FOR MEDIA "  SUNDAY, 21 MARCH 1982

ELECTORATE TALK .  .

The housing policy package announced by the Treasurer, John  Howard, last Thursday,confirms the Government's concern for  the objective of home ownership. Indfeed it is under Liberal  Governments in the post-war period that the dream of home  ownership has become a reality for the great majority of . . .  .   Australian households. Today almost 72% of Australian households

own or are buying their.own home, compared to around 50 - 55%  in the late 1940s. Among young adults, the ,  impro'vements ,  in  home ownership prospects has been even, more dramatic. In  the 25-34 year old age group, the proportion buying or  purchasing their own homes has increased from less than 37%

in the late 1940s to over 60%.today. .  .

For the great majority of people the purchase of a home is  the biggest, and probably the most complex purchase they make. It involves saving: for a deposit, for furniture and fittings  it involves dealing with banks or building societies, with  agents and solicitors,  and it involves a commitment to spend  the equivalent of several years of their annual income. They are prepared to do all of this because they recognise

that they are not only acquiring an asset of great value  in itself, but also providing for themselves and their families  a basis of security and stability.

Achievement of the goal'of home ownership has never been easy,  and in various ways over the years governments have assisted .   and encouraged the growth in the level of home ownership.  In recent times, for a variety of reasons, the intending  home buyer has faced increasing difficulty. Much of the  discussion of these problems has focused on interest rates,  but while interest rate increases have undeniably played

a part,  it would be wrong to say that they have been the only,  or even the most fundamental‘problem. Indeed for anyone who  started to buy a home four or five years ago or mote,  the  burden of meeting their repayments has declined significantly

despite the increases in interest rates that have subsequently  occurred.

Many of the difficulties faced by more recent homebuyers, and  by those now wanting to buy their first home have arisen from

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the pressure of costs on house prices. Increases in the price of land and increases in the cost of, home building are in part a consequence of overall inflationary trends which can only be addressed by continued firm economic policies. But . the costs imposed by building regulations and servicing costs have also posed very material problems for many home b u y e r s ,  and state and local governments have a real responsibility

to examine very closely their policies in these areas where they add to the ultimate cost of housing.

There can, be no doubt, however, that the current world  environment of high interest rates,- from which the Australian  economy cannot realistically be insulated - has also made a  significant contribution towards difficulties which have '

arisen in the housing area. With institutions such as savings  banks constrained in terms of what interest rates they can offer  on deposits, household savers have tended to shift their deposits  to other a r e a s a n d the funds available to home buyers from

the traditional home lending institutions have diminished,  leaving many people unable to borrow, or forcing them to seek  additional funds from other more costly sources.

The package of measures announced by the Treasurer faces up  to these realities, and concentrates assistance on those who  really are in need.'. It increases the availability of housing  finance to new borrowers through the banks, which have guaranteed

an extra $400 million on top of their normal lending in the  next 12 months for housing loans. That represents over 12,000  additional loans. It provides increased assistance, and  more timely assistance, to families with modest incomes

saving to buy their first home, through a modified home  savings grant scheme, which will help over 40,000 home buyers  each year.

It provides assistance in meeting increased repayment burdens  through a tax rebate scheme for over 450,000 home buyers who  first entered home ownership in theÂ·last five years, and  will provide similar assistance to all new first home buyers

in the future. It provides additional assistance to all home buyers who  took out loans from the nationally operating banks in the last  two years, through an agreement with the banks that they will  defer increased repayments for those borrowers for two years

if they wish, and the banks have agreed to develop special  arrangements, including low start mortgages, to further assist  new first home buyers in the early years of their loans. And it provides for special assistance through joint arrangements

to be developed with the states, for low income home buyers  and private renters who are facing extreme difficulty and  hardship in meeting their housing costs.

At the same time we have realistically faced up to the problem  that the nationally operated banks and savings banks have faced  in paying for deposits to allow them to make"more loans by  allowing them to raise interest rates on home loans by 1  percentage point to 13^%. Even on this level their home

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lending rate is no higher than that charged on substantial  housing loans by building societies in any state, and is lower .   than in most. It is worth noting that the building societies  and their rates are under the legislative authority of state  governments,.not of the Commonwealth. For those who  bought their first home with the aid of a loan from a bank in the

last five years, the cost of the higher interest rate will be  offset by the new tax rebate available to them, and almost half .   of all borrowers from the banks will be offered the  choice of deferring any consequential increase in their

repayments for two years.

The new deal that has been given to recent and prospective  home buyers puts beyond doubt the Commonwealth Government's -   commitment to home ownership. Here in Victoria, Premier  Lindsay Thompson and Housing Minister Jeff Kennett have  welcomed the Commonwealth Government's package which

they estimate will assist some 175,000 Victorian families,   and they have added to it a housing subsidy scheme of their  own to assist .all other family home buyers in the State of  Victoria. I am sure that all home buyers in Victoria will  welcome their imaginative commitment.

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