The Rudd government has indicated today that the FHOG will not be extended beyond June 30th.
What are the implications of this of the property market?Good,
The first home owners grant is a terrible waste of government money, that actually does nothing to increase affordability.
If the goverment were serious about increasing affordability they would take measures to increase supply, not just hand out money.
It's like this, if you had 5 bananas on a table surrounded by 6 people that all wanted one, the offcourse a bidding war would start with the end result being the price rocketing up and some one missing out. Simply giving people at the table more money will do nothing but increase the end price of the bidding war and some one will still miss out, Yes it may be a different person missing out but some still must miss out.
How ever instead of giving out money, you managed to increase the supply by 2 extra bananas, then there would be no bidding war, no one would miss out and the price would remain affordable.
Government needs to cut red tape and give incentives to developers to increase supply.
Thanks Tysonboss1. Steve talked about this when he was in Sydney a couple of weeks ago and basically said that if the FHOG is not extended then this will have serious implications for the housing market. I guess we will see some frantic activity in the housing market (especially the low end) until June 30th ,then who knows. This will also be bad news for developers and renovators as the buyers are going to dry up.
or is it?????
What has been suggested is that the additional $7,000 added to the existing FHOG (or $14,000 for newly constructed homes) last November will be discontinued after 30th June, which was always the intention, not that the FHOG will be scrapped (some news articles I've read today seem to have blurred the difference a little…).
Like all temporary measures, it has to come to an end at some point. After 30th June, new home buyers will still be able to get a $7,000 FHOG, plus any additional incentives offered by various states, such as an additional $5,000 offered by the Victorian government. My feeling is that the FHOG doesn't do a huge amount ( a recent study I read suggested that a FHOG is the primary motivation for only 7% of new home buyers), the value of the FHOG is factored in to the asking price….
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