Hi all, I appreciate that most of you are investors and or are looking to invest after already purchasing your own home. Many of you will have benefited from the first home owner grant for existing dwellings when it was available in your respective states or territories. Many of you will have children who are looking to follow your lead and get started in the property market. Please show your support by signing the online petition to bring back the NSW first home owner grant. If you can, please also share the link via twitter, facebook, email and word of mouth. United we can effect change! Thanks http://change.org/en-AU/petitions/the-nsw-government-bring-back-the-first-home-owner-grant-for-existing-dwellings
The first home owners grant just inflates the marketplace making it more unaffordable for first home owners to get into the market. Sure it gives them some extra capital but it just makes emotional first home buyers over pay for properties and create a hype.
It would be better to see the grant reduce or cancel the stamp duty payable on a First Home instead of a cash payment.
I agree with Wilko – the grant probably didn't make up for the inflated demand which probably drove prices up by more than the $7k or so grant that was on offer.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Subsidies only distort markets. A better policy although in reality another subsidy is to incentivise 1st home owners to save for bigger deposits. During the 80's NZ ran such a program. You saved into a designated Home Ownership Savings account. You could claim $0.45 tax rebate for every dollar saved up to $2000/yr over 5 years from memory. I think there was also a minimum hold period of 5 years.
There are far better methods for lowering or containing entry costs for new entrants but that will never be on the table because it means removing distortionary taxes (stamp duty) and supressing RE price growth through interest rates and deposit requirements. That impacts State revenues.
Land banking by large developers who control the supply of land and State imposed development costs are far bigger contributors to RE costs. A petition would be far better off addressing some of the structural issues around RE pricing rather than constantly tapping the tax payer to subsidise others into property
+1
Modernity Investing
Email MeI concede there is an argument that government incentives can (and perhaps in the past have) distorted the market such that any benefits may be wiped out. However, and without disrespect to forum members, it seems pretty indisputable that recent record auction clearance rates and significant property value increases have been driven primarily by investor demand. All I am suggesting is that some form of government assistance (be it grants or stamp duty concessions) may level the playing field since at the moment first home owners simply cannot compete with investors – many of whom are in the position they are in today because they benefited from previous government grants. I understand that it may be difficult for me to sway investors. I just ask you try and think back to how hard it was for you to put your first foot on the property ladder.
Record auction prices and clearance rates might have something to do with the record low interest rates we are experiencing in the last 25 years
Of course, but the point remains that it is primarily investors who are being motivated by these low interest rates to sink their money into the property market. Notwithstanding consecutive interest rate cuts there was a 57% drop in the number of home loans to NSW first-home buyers in the 12 months to the March 2013 quarter. In other words, low interest and the existing FHOG for new properties have not been enough to make property affordable for first home buyers.
+1 for better to aim to remove stamp duty. That will dramatically reduce the deposit requirements for First Home Buyers entering the marketplace, and allow more fluid transactions of property with less cost barriers.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Thank you all for sharing your views. I have broadened the scope of the petition to address the possibility of stamp duty concessions for first home owners.
If it wasn't for the FHOG on existing dwellings in 2008 i wouldn't have been able to start my portfolio. Í do agree with some of the points hopefully they do their research first though.
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
FirstHomeOwner wrote:it seems pretty indisputable that recent record auction clearance rates and significant property value increases have been driven primarily by investor demand.Investors are the primary drivers of the market usually combined with low interest rates.
In WA the government offer a shared equity scheme;
http://www.keystart.com.au/home-loans/shared
Not sure if this is on offer in other states but if I was trying got break into the market for the first time I would consider this option.
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone MePerth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
FirstHomeOwner wrote:I concede there is an argument that government incentives can (and perhaps in the past have) distorted the market such that any benefits may be wiped out.So you are suggesting we repeat the mistakes of the past for no gain.
Quote:However, and without disrespect to forum members, it seems pretty indisputable that recent record auction clearance rates and significant property value increases have been driven primarily by investor demand.Investor demand is only one component in the matrix. What is often missing is the influence of hot money looking for opportunity from international investors. There is wide scale abuse of the FIRB requirements by international investors and the the FIRB appears to have no interest in correcting the problem. Internationals tend to overpay for property and consequently can have a disproportionate affect on property pricing.
Quote:All I am suggesting is that some form of government assistance (be it grants or stamp duty concessions) may level the playing field since at the moment first home owners simply cannot compete with investorsYou have already acknowledged that in your first sentence that subsidies distort the market for little or no gain so why persist with a flawed strategy? So how about prospective first buyers learn some discipline and skills that will enable them to enter the market on a sound footing. The argument that first home buyers can't save for a deposit because prices rise too fast is frankly BS. What they can't do is save fast enough to buy a new 4 bedroom double garage with 60" plasma type property. If you can't get in at the level you want you lower your standards and buy what and where you can to get runs on the board. The more motivated buyers tend to buy reno jobs and work on developing their equity through this method then move on or use increased equity to leverage into another reno property and so on. This forum offers many strategies to get into and expand ones property portfolio.
Quote:many of whom are in the position they are in today because they benefited from previous government grants.And many aren't which goes to show that it's doable and that subsidies aren't as necessary as some like to make out. There are investors here who bought their first properties when they were 18 or younger and have since built million dollar portfolio's. FHOG weren't first and foremost in their investing strategy.
Quote:I understand that it may be difficult for me to sway investors. I just ask you try and think back to how hard it was for you to put your first foot on the property ladder.What you're looking for is the easy option – get in the door on someone else’s back.
An example of how distortionary and completely counter productive FHOG policy can be on a market is Perth. In the 2013/14 budget the WA govt decided to reduce the FHOG on existing dwellings from $7000 to $3000 by Sep13
That sent a wave of first home buyers into the market who sought to capitalise on the FHOG before it reduced. The resultant surge in demand drove prices much higher as first home buyers paid over the odds for property in fear of missing out. The demand drove prices up and the fear of rising prices reinforced demand in a self perpetuating loop.
In order to save $4000 in grants first home buyers ended up paying 10's of 1000's more than they should have. Since the reduction of the grant came into effect prices have pulled back on average $14,000.
FHOG policy is so distortionary that the affect is usually multiples greater than the actual subsidy. Any benefit is only captured by the very first buyers. The market quickly adapts to additional capital and demand. Those unable to act quickly enough invariably find that price increases have exceeded the value of the subsidy and actually left them in an even more difficult position than before. All those following have an even greater hurdle than if nothing had been done.
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