The government will effectively bypass the blockage by re-introducing the legislation, allowing it to bring the scheme back to the upper house this sitting week.
If passed, it would give 40,000 first-home buyers access to cheaper deposits through a shared equity scheme with the federal government.
"This bill is really important," said Housing Minister Clare O'Neil.Â
"It will see 40,000 aged-care workers, childcare workers and factory workers, who can otherwise only dream of the chance of home ownership, get that opportunity for secure housing over their head."
Australia is struggling to meet a national target of 1.2 million new dwellings by 2029. (Brendan Esposito/AAP PHOTOS)
Greens housing spokesman Max Chandler-Mather insists the scheme will be inaccessible to most essential workers.
"It is cruel and deeply dishonest for Labor to suggest their dodgy scheme will help teachers, childcare workers or nurses when the reality is they will either be completely ineligible or otherwise unable to afford the mortgage repayments under the scheme," he said.
The government has also struggled to gain support for its Build to Rent bill, which would provide tax incentives for developers who rent out newly-built housing stock.
Property Council of Australia chief executive Mike Zorbas said neither bill was a silver bullet, but delaying legislation addressing the housing crisis would only cause it to drag on further.
"These last few sitting weeks of the year are the right time to sideline entrenched political views and pass legislation to build more homes and get more Australians onto the property ladder," he said.
Mike Zorbas says massive additional investment in rental housing is urgently needed. (Mick Tsikas/AAP PHOTOS)
Mr Zorbas said Australia was decades behind in supplying the market-rate and social housing needed to address the crisis, with current home-building levels at two-thirds of the required rate to hit the national target of 1.2 million new dwellings by 2029.
"We need bipartisan support to fix the legislation before the Senate and unlock massive additional investment in rental housing at a time when the supply of new apartments is at half of 2017 levels," he said.
Economists have said the Build to Rent bill would help improve supply, but the Help to Buy scheme would make housing more expensive by further driving up demand.
The Greens say they would be willing to negotiate with the government on both bills in exchange for their demands of introducing a cap on rent increases, ramping up investment in public housing and phasing out tax concessions for property investors, including negative gearing and the capital gains tax discount.
The government in September instructed Treasury to model the impact of amending the tax breaks, but Prime Minister Anthony Albanese said there were no changes to his housing agenda.
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