Opposition Leader Peter Dutton has unveiled a major new policy to allow some first home buyers to deduct interest payments from their taxable income.

In an ambitious move aimed at tackling the ongoing housing crisis in Australia, Opposition Leader Peter Dutton has announced a new policy that will enable certain first home buyers to deduct interest payments from their taxable income. This announcement comes during a critical phase of the election campaign, with housing affordability taking center stage. The policy allows first home buyers purchasing newly constructed homes to temporarily engage in a practice known as 'negative gearing,' which traditionally applies to investment properties. This initiative, applicable to the first $650,000 of a mortgage for the first five years, is seen as a strategic counter to the Labor party's plan that encourages buyers with a mere 5% deposit. With eligibility limits of $175,000 for singles and $250,000 for couples, the policy appears to cater to middle-income earners suffering from rising housing costs. Dutton emphasizes that this plan will help restore the 'dream of home ownership' for young Australians. However, experts have raised concerns that this approach might inadvertently inflate housing prices further, as it may stimulate demand without sufficiently addressing the limited supply of available homes. The Cohesion framework, which includes a proposed $1.25 billion cost over four years, remains subject to uncertainties around its uptake, raising questions about the fiscal implications and effectiveness of the policy. Comparatively, Labor’s broader housing strategy looks to include guarantees for deposits and construction of new homes, which theoretically could stabilize market pressures in the long run. As Dutton attempts to regain footing amidst slipping polling numbers, this bold move will undoubtedly be scrutinized by economists who warn against policies that might exacerbate existing issues rather than alleviate them.