Housing policies: What are Labor and the Coalition proposing?

Home ownership has emerged as a major battle zone in the federal election, with both parties pitching a range of measures to help first home buyers take that difficult first step into the property market.

The policies mostly seek to overcome the two main hurdles to home ownership - the difficulty of saving a deposit as house prices keep rising and the difficulty of meeting loan repayments.

Here's how they compare.

Labor housing policies

Prime Minister Anthony Albanese has promised to help first home buyers to purchase a property with just a 5% deposit rather than the standard 20%.

Labor's plan involves expanding its existing First Home Buyers Guarantee scheme - where the government acts as a guarantor on the loan and so does away with the need for mortgage insurance - to make it available to all first-time home buyers.

However, it would only be available to buyers of homes under the median home price for each capital city.

It has also committed $10 billion to support the building of 100,000 new homes for first home buyers, consisting of $2 billion worth of grants and $8 billion worth of zero-interest loans.

Labor has already introduced a shared equity scheme due to start later this year.

Under the Help to Buy program, the federal government will co-buy properties with individuals, purchasing 30% for existing and 40% for new homes.

It is allocating 10,000 places a year for four years and the program will be available to singles who earn up to $100,000 and couples and single parents who earn up to $160,000.

Participants can repay the money over time or when they sell the property.

Coalition housing policies

Liberal Party leader Peter Dutton is planning to give first-time home buyers a tax deduction for some of the interest paid on their home loan, but only if it is for a newly-built home.

Home buyers could deduct interest payments on up to $650,000 of their mortgage from their income taxes for five years.

The scheme will be means-tested at $175,000 for singles and $250,000 for couples and will only be available while the recipient is living in the home.

The Coalition is also planning to modify the First Home Buyers Guarantee scheme - lifting the income cap from $125,000 to $175,000 for singles and from $200,000 to $250,000 for couples.

The policies announced on Sunday are in addition to existing policies.

It plans to allow first-time home buyers to withdraw up to $50,000 from their superannuation account to help with their deposit, with the money to be repaid when the house is sold.

It will also direct the Australian Prudential Regulation Authority (APRA), which oversees the financial stability of the banking system, to weaken home loan serviceability test for first home buyers, cutting the required loan serviceability buffer from 3 percentage points to 2.5 percentage points.

The coalition is also promising $5 billion in infrastructure investment to unlock 500,000 new homes by funding water, power and sewerage.

What do the experts think?

Both parties' policies have been condemned by economists, who say that putting more money in the pockets of first home buyers will lead to even higher home prices by fuelling demand, and that the Liberal's plan will be a major drain on the federal budget.

Most policies won't create any new houses, although Joe Moloney, deputy program director of the Grattan Institute's housing and economic security program, says Labor's $10 billion home fund is a supply-side policy.

But he said raising the personal income caps for Labor's First Home Buyers Guarantee will probably extend help to people who mostly could have saved their own deposit anyway.

Moloney described Dutton's mortgage payment deductibility plan as bad policy that would help high income earners more than those on modest incomes, because tax deductions are worth more to people on higher incomes.

Under the scheme, a first home buyer with a taxable income of $120,000 with a $650,000 mortgage at 6.1% will receive a benefit of around $60,000. However, someone earning $250,000 would benefit by $87,000.

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