Hi all!
Just wondering what the general consensus is about the elimination of the stamp duty grant in NSW for First Home Owners next year? How will that affect the property market? Some people tell me house prices will fall further but I dont think it is that simple right?
Its been a slowing thats necessary.
If you have x dollars to buy a house and someone injects x+FHO Grant .. then the purchasers of property will extend themselves to whatever x plus the FHO Grant allows them to buy. However on the same note .. the new vendor of the property gets extra cash in his pocket due to the FHO buyer giving him more cash. So HE can buy more now too.
Its a domino effect that really pushes prices up.
You just dont remove something like that from the market overnight either. You have to do it with notice and gradually. Otherwise people go into panic mode and try to get in selling before it all disappears.
So removing the grant does nicely in making sure the market doesnt get collateral damage. And doesnt face a drastic drop either.
Please correct me if I'm wrong.
I have always thought that the current government increased the FHOG x 3 ($21,000) during the GFC peak, to combat the relaxed FIRB rules, so that FHB's could compete with the foreign investors/students/ near 500,000 immigrants during '08-'09 that truly drove up the residential real estate prices?
Because, since the FIRB rules were tightened up again since early/mid 2010, the FHOG has gradually fallen and subsequently stopped.
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