Affordable Canberra housing.... so close.

hax;

hax said :

for those building a new home kev’s plan is better; the 21k (as opposed to 14 for
ACT Labors land release strategy??
ACT Labor artificially held back on developing land for years, which has lead to the current land shortage in the ACT. This has driven the price of land up dramatically over a short period of time.
Suddenly they’re the hero for desperately trying to develop land now? Total propaganda.

Would you rather they just released all the land straight away without a thought for the infrastructure ( sewage, power, roads etc) needed? Contary to what some people may think the govt does not have the unlimited resources needed to do this and that’s why land release takes a while. Its not as if they all sit in their offices twirling their moustaches thinking of else the can be evil.

My point, which you seemed to have missed, is that a land release stratergy and an incentive to build will help with housing affordability while free money and stamp duty cuts won’t

tom-tom: I don’t think people are suggesting this intervention was designed to help housing affordability. However as with anything, there are unintended consequences, and this is what we are discussing. You and I both have similar ideas as to what we would have done. The clear conclusion here is that the specifics of the package are political, not economic.

Thanks Kevin for propping up my property value by $14K

I wouldn’t go depending on that too much compadre! Things have changed quite a bit from when the original 14k first home owners grant came out.

for those building a new home kev’s plan is better; the 21k (as opposed to 14 for buying an older property) acts as an incentive to build, increasing supply and in theory lowering prices.(incidently the same point could be made about ACT labors land release way of improving housing affordability)

In theory lowering prices??
It’s the same overpriced thing, which is still unaffordable (without the government giving you money). This just holds off the price having to come down due to the fact people can’t afford it through their own means.
It’s already been artificially held off for years, this will just mean a nastier drop some time later..

ACT Labors land release strategy??
ACT Labor artificially held back on developing land for years, which has lead to the current land shortage in the ACT. This has driven the price of land up dramatically over a short period of time.
Suddenly they’re the hero for desperately trying to develop land now? Total propaganda.

Nothing I see is addressing the actual problem, or the causes. We’ve got a leaking bucket, and they’re just pouring more in.. instead of fixing the hole. Its rubbish. (at least we’re not America where they are using borrowed money to pour in to their leaky bucket)

You can see the OP’s point. It will inflate the lower end of the market (great). And if it’s not means tested, it’ll be more middle class welfare.

And it is galling to be paying taxes, and see them flowing to people with more money than you, because they’re eligible for forms of welfare that are aimed at people who don’t need welfare.

Couldn’t agree more 2604. Credit lenders at the moment are currently aggressively pushing credit insurance. Don’t fall for it! Don’t get me started on it but it will increase your loan, lengthen the loan term and will you protection against absolutely nothing – because their guidelines are so tight you’ll never be able to successfully make a claim. Not to mention pushing it on those who are highest at risk – and shouldn’t be lent the money in the first place! See a recent (London) FSA case against GE CreditLine. It was a great win and I think the issue is now being looked into here in Australia.

This won’t give the market a massive boost like the original $14k grants did in 2000-01. That was just a catalyst. The real issue was unregulated, unrestrained, cheap credit available to everyone who could scratch his/her name on a loan contract. Banks are (or should be) much more circumspect about lending now that it’s become apparent that many of those ppl can’t afford the repayments.

Also, with a median house value of ~$490,000, or close to 7x average household income, the Canberra market doesn’t have very far to go before it maxes out, just like Sydney and Perth have done. After that, prices will just increase in line with CPI.

i think a lot of people are missing the point of this; the idea wasn’t to increase housing availabilty but to inject some funds into the economy; if housing affordability could be improved a little as a side effect then thats a good thing.

on the idea of what the package will do to achieve its goals; then yeah it should work; it isn’t what i would have done if i were king (more money to pensioners, students, unemployment benefits and low income tax cuts… ie targeting the money towards those who will bear the brunt of any recession. If it was a prolonged recession another injection in the form of national infrastructure, eg a very fast train link on the east coast, and an introduction of free tertiary education in areas of high demand, eg doctors nurses teachers tradies)

One thing i certainly wouldn’t have done was make a big fuss about it and go on tv etc; australia’s economy is still strong and well regulated and we will get through the crisis in good shape; there will be pain until we come out the other side but we will come out the other side. the major thing going wrong for us is a loss of confidence at the market and i’m not convinced that pressing a $10 billion panic button is the best way to inspire that confidence. then again i’m not the one with a treasury dept to advise me.

on the housing affordability issue i’ll make the same points i already have with respect to zeds no stamp duty plan; for those buying an established property the 14k will just increase the price, they are many buyers competing for a few houses in a very inelastic market; no prizes for working out who gets the goodies at the end of that.

for those building a new home kev’s plan is better; the 21k (as opposed to 14 for buying an older property) acts as an incentive to build, increasing supply and in theory lowering prices.(incidently the same point could be made about ACT labors land release way of improving housing affordability)

justbands said :

> normal is up and down, not just up.

Yes, but not down like a lead balloon.

sometimes it is, particularly if you’ve been trying to stave off the down.

Thanks Kevin for propping up my property value by $14K. Peoples nature is that they will spend to the absolute limit, so given that I live in the sort of house which a first home buyer is likely to buy (I know because I was a first home buyer when I brought it) It means that I can charge at extra $14K and know that the buyer has the extra money.

I know it’s maybe not the most friendly way to look at it, but I also see my house as an investment, one which in recent times has preformed better than any of my other investments, especially super.

hehe, thanks mate! I’m going for beer so I’m happy as… I’ll buy you one (then drink it for you :-).

I have to say Sands, that’s quite a wake up call for me. And you’re the second person I’ve heard from in the last 2 days who will not qualify for the grant because they have “had their name on the deed” before. I agree, it is most unfair in those cases – and I now see your point about means testing. My apologies.

I do also see your point about my original post, and quite deserve the aggressive response. I thought of that just as I clicked on “post”.

Good luck in your search, thanks for widening my eyes a little and hope your next home works out much better.

>> justbands – I’m talking about the disadvantaged. Not me me me me. Jeez. Congratulations on owning a home! I hope you don’t lose your house for reasons out of your control.

I was just having a laugh along with PoodleHat. We won’t lose our house ever.

>> Yes yes Justbands – but how much did you pay for your house back then 😛

Compared to now, not a lot. Mind you, interest rates were in the high teens & our wages were much, much lower than what people get paid now.

Haha…yeah! & I bought my first house over 15 years ago..WHERE’S MY GRANT! Me, me, me, me, me, me, me, me, ME!

Yes yes Justbands – but how much did you pay for your house back then 😛

justbands – I’m talking about the disadvantaged. Not me me me me. Jeez. Congratulations on owning a home! I hope you don’t lose your house for reasons out of your control.

tylersmayhem – I’m not entitled to the grant! You want to call me an “ungrateful *!#$@%^&” without evidence, then yeah, you’re gonna get an aggressive answer! What do you reckon!

I’ve had my name on a property title before (not that I gained anything from it) but there are lots of circumstances – not mine – where people are forced out of the property market and not just because they want to cash in on a booming market.

Some people have lost their house because their gambling partner got into too much debt (not their fault but they were on the mortgage so now just have to look for affordable rent – often with children).

Some people who aren’t as cluey as others took advantage of irresponsible bank lending and over-committed themselves = had to sell or go bankrupt.

Some people split up with their partners and want to do the ‘right thing’ by leaving the children with a roof over their heads = out of the property market.

I’m in it for those groups.

Haha…yeah! & I bought my first house over 15 years ago..WHERE’S MY GRANT! Me, me, me, me, me, me, me, me, ME!

I bought a house last week…So very happy with kevvy, surely it could have come in then, what an inconsiderate a$$hole, he’s only got a country to run….I could have a new Plasma Kevvy!

“You’ve now got a better opportunity than I had to buy a first home” – no I don’t. What an idiotic presumption.

What an amazingly aggressive answer. Cheers though, you’re not the first to call me retarded or an idiot. My mothers been calling me that for years ;P not sure how you ever had me pinned any other way.

Please tell me how an additional 7-14k is not going to put you in a better (albeit limited) position to buy your first home. It’s a half to full payment for stamp duty for Christs sake. What am I over looking here?

After throwing your toys out of your pram and name calling, I’d actually like a reply.

OliverCromwell said :

The facts of the matter:
The federal government is desperately trying to prop up the housing market as the bubble that has been slowly inflation over the past 6-7 years is ready to burst.
Housing prices rarely stabilize – because they’re often driven partly by ‘investors’.
If you’re buying houses because you want capital gains, you’re going to be willing to pay more based on the capital gains you expect to get.
When it’s clear that house prices aren’t going to be rising anymore, or worse, fall, there’s realignment in prices.

All these rubbish initiatives like first home buyers grants do NOTHING but prop up house prices, they do not increase affordability one bit, not only because of housing ‘investors’, but also because of the sort of people who go to the bank, find out the most they can borrow (on variable rates *facepalm*) and still afford repayments, go to auction, and bid up to that amount.
Give first home buyers grants, increase prices by giving people more money to play with.
It’s pretty simple
– increasing demand while doing nothing for supply, there’s only one direction prices can go

It’s also fairly obvious that the cash being thrown at lenders is also for the same purpose. “competition among lenders”? you’re kidding.

I understand why the feds now have no choice now – we do NOT want a housing collapse here, but it’s been the standard practice of both federal and state governments during the past few years to keep house prices high for baby boomers glutted on equity and for the stamp duty revenue – now the government has no choice.

Indeed.

Re spending: I don’t object to spending, jimbocool is right. I object to the way Rudd has targeted the spending.

Another steadying influence on the housing market may also be the banks themselves. Given the circumstances the banks will be far more careful who they lend money to even with the extra FHOG, which may result in a far more sustainable housing market while still allowing for growth.

Gungahlin Al said :

“I am a young first home buyer and I realise it is gibberish policy.”

So Jakez, you’d agree then that your Liberal party’s proposal for the FHO stamp duty exemption is also gibberish polish, and concede that it was always likely to have the same adverse effect on home prices, and that Zed should have learnt something from the damage done by John Howard’s FHOG, and the fact that he hasn’t does not bode well?

You might well think that Gungahlin Al. I couldn’t possibly comment.

First home buyers do re-enter the market – they were looking to buy previously, been scared off by the financial crisis and now have an incentive to get back into the market and hopefully buy their first home, thus stimulating home building which has a huge knock on effect in the economy by keeping tradies, material suppliers, manufacturing etc in work.

The alternative is to allow home building to stagnate or go backward and watch people lose their jobs as the work dries up. pretty easy choice I would have thought.

> normal is up and down, not just up.

Yes, but not down like a lead balloon.

justbands said :

In a “normal” economic climate, sure…this would be a little crazy. However it’s not a normal economic climate. Drastic situations require drastic action sometimes. Seems to have been fairly well received by many economic & political observers.

normal is up and down, not just up.

You’re right Sands….all Government decisions should take into account your own personal circumstances.

are you retarded tylersmayhem? I had you pegged all wrong.

“You’ve now got a better opportunity than I had to buy a first home” – no I don’t. What an idiotic presumption.

“You’re being given a handout” – no I’m not. Idiot.

I voted Rudd in, but I’m angry about this so I’m damned well going to post. Bugger off the thread if you don’t like it.

Anyway back to the normal posts…

“when real estate agent Anthony Toop said the number of first-home buyers would increase by between 20 per cent and 30 per cent. “This really allows them (first-home buyers) to re-enter the market,” ”

First home owners don’t re-enter, they enter the market. My point is that some people can’t afford to ‘re-enter’ the market after leaving it under various personal and financial circumstances. Why discriminate against those people/families?

Then he goes on to say… “Mr Toop said house prices could increase slightly but the main concern was the number of affordable properties available to the first-home buyer.”

That’s not my main concern! Why not – as p1 said – address the concerns of families that can’t afford housing or even rent (because you know this will increase rent!). But Thumper is right, it’s obviously a popularity move. The co-contribution savings scheme was rational. This is idiotic.

Make that “bubble which has been slowly inflating”

The facts of the matter:
The federal government is desperately trying to prop up the housing market as the bubble that has been slowly inflation over the past 6-7 years is ready to burst.
Housing prices rarely stabilize – because they’re often driven partly by ‘investors’.
If you’re buying houses because you want capital gains, you’re going to be willing to pay more based on the capital gains you expect to get.
When it’s clear that house prices aren’t going to be rising anymore, or worse, fall, there’s realignment in prices.

All these rubbish initiatives like first home buyers grants do NOTHING but prop up house prices, they do not increase affordability one bit, not only because of housing ‘investors’, but also because of the sort of people who go to the bank, find out the most they can borrow (on variable rates *facepalm*) and still afford repayments, go to auction, and bid up to that amount.
Give first home buyers grants, increase prices by giving people more money to play with.
It’s pretty simple
– increasing demand while doing nothing for supply, there’s only one direction prices can go

It’s also fairly obvious that the cash being thrown at lenders is also for the same purpose. “competition among lenders”? you’re kidding.

I understand why the feds now have no choice now – we do NOT want a housing collapse here, but it’s been the standard practice of both federal and state governments during the past few years to keep house prices high for baby boomers glutted on equity and for the stamp duty revenue – now the government has no choice.

“I am a young first home buyer and I realise it is gibberish policy.”

So Jakez, you’d agree then that your Liberal party’s proposal for the FHO stamp duty exemption is also gibberish polish, and concede that it was always likely to have the same adverse effect on home prices, and that Zed should have learnt something from the damage done by John Howard’s FHOG, and the fact that he hasn’t does not bode well?

Right?

And by extension, you’d then be seriously worried about what could happen to house prices with the ill-considered federal ALP move coupled with the Liberals getting government in the ACT and carrying through with the stamp duty exemption, right?

As toriness said, only those who can get in quick will benefit – like a pyramid scheme, those down the chain are the ones who pay the price. As a recent renter, this is all quite worrying. As a recent mortgage owner, I shouldn’t care less. Equity here we come…

At the very least, these moves (federal and ACT) could have been tied to sustainability initiatives. Things like a better HWS or better glass are the first things to go when the market stretches people.

Is it too late for me to nominate???

but then shortly i predict that *amazingly* house prices (in the lower end of the market more than anything) will jump by the amount the FHOG is being increased!

This is a possibility, but it’s also up to the first home buyers to be sensible, and resist the urge to panic and jump at any place they see. The housing market has been slipping lately, and I’d like to think it’s because there are a higher density of buyers our there who are patient and who are not afraid to say “I’m not paying THAT for THAT”.

Be patient, refuse to pay the added 7-14k (if that actually happens), but I don’t believe the ACT housing market is in any position to raise the costs across the board by this amount.

o in the end, the real ones to benefit from this will be state/territory governments (more stamp duty)

Uhh – I’m sure I’ve heard whispers about the government actually considering waiving stamp duty for first home buyers. Yet another 12-16k bonus – I’m sure they’ll be complaining about that too.

I still can’t get over the whinging by potential first home buyers though – you should be jumping for joy.

I think most here are missing the point. The aim of the exercise is to get as much cash into the economy as quickly as possible – the government took a whole heap out with its budget surplus, and the Reserve Bank took a whole heap out by raising interest rates. The Reserve Bank’s now injecting billions back in via the interest rate cut, and the government is handing $10bn to people who will actually spend it – pensioners and the like. If the money went to me, I’d just whack it on my home loan which wouldn’t be the desired result…pensioners buying plasma TVs is the desired result. Lots going in to FHOG is an attempt to shore up the real estate market – prices going up as a result is a sign of success.

yes – it’s a pity there’s no way to actually tie the money to buying services, or Australian goods – or even anything but debt.

Spending is exactly the right way to get out of this crisis.

Except that most of the spending will be in the form of credit (Buy a home now! Don’t worry about prices in a year! Yes, a new LCD TV will keep you warm in winter! Buy now on interest free!), and then wham – we’re exactly where the US is now.

Spending is exactly the right way to get out of this crisis.

Seems to be most peoples complaints here are based on the fact that they’re not eligible themselves.

jessieduck said :

I was motivated enough to search All Homes for a couple of hours… The $14K is enough to make me think more about it…

My brother in law is a real estate agent and he is really chuffed- He had a lot of listings but not a whole heap of buyers so this will get people looking.

and $21K !!! for a new place. Lots of new apartments going around atm.

I with jakez – part of me is angry because it’s bad policy (did Tanner really say we could spend our way out of this crisis? What are you on, man?), but a much bigger part of me is angry because I can’t access it to buy an investment property. I promise I’d be a kind and caring landlord 🙂

i don’t think house prices will rise even with this grant. prices have been slipping for ages.

http://www.canberratimes.com.au/news/local/news/general/stanhope-offers-interestfree-loans/1332541.aspx

“Labor has pledged to provide interest-free loans for struggling Canberrans to stem a large jump in the number of homes being repossessed.

Chief Minister Jon Stanhope said that, if re-elected, the Government would offer loans of up to $10,000 to those struggling to repay their mortgages, with tailored repayment plans.”

I wonder what the definition of “struggling” is… I’m sure that with minimal creative accounting most people would claim to be eligible.

I was motivated enough to search All Homes for a couple of hours… The $14K is enough to make me think more about it…

My brother in law is a real estate agent and he is really chuffed- He had a lot of listings but not a whole heap of buyers so this will get people looking.

Dreaming of owning your own home in a major city without sufficient financial backing is chasing a shifting envelope, and developing a systematic policy approach to housing which is equal for everybody on it is something that will almost always involve a lot of headscratching.

The FHOG are great for a local flow-on effect if people are buying in Wagga Wagga, Mildura, or the like, with stable existing housing stock, lower rates of stock turnover, and contribute the FHOG as a localised stimulus for increased construction and development of newer homes.

Less so if you’re in a major metro area (Sydney, Canberra, Melbourne, etc) with large unmet demand, higher rate of turnover for existing stock, and high construction and development costs.
(But nobody is going to say no to an extra $7000 cash in hand, when everybody else can still get it)
In metro areas, FHOG contributes to driving up prices and increasing the pace of turnover, while new constructed buildings get priced to meet the new norm. So new homes get bought by more wealthy people already, or less affluent people start leveraging themselves balls-deep, just to stay in the game.

NRAS is meant to decrease landlord’s vacancy risk, increase overall supply of rental stock, reduce overall rental costs for low and middle incomes, and give a push to convert existing but non-qualifying rental stock into affordable ownership housing through “large-scale industrial investment and innovative delivery of new tenancy”.

Which could possibly deflate house-ownership demand, or just turn single rental-house landlords into multi-house landlords, with guaranteed income subsidised by Government.

Nice post you ungrateful *!#$@%^& (trying not to get modded these days). I think you might be a typical hater of K-Rudd and will just find any and every reason to knock him. You’ve now got a better opportunity than I had to buy a first home, but having the grant doubled, and in some cased tripled to assist you. I bought about a month ago – and do you see me whingeing about “I missed out and I deserved to get back-paid the grant blah blah blah”. No. You’re being given a handout – take it, enjoy it and shut-up.

By the way, what ever happened to the promised tax cuts from the last election?

We got them earlier this year

They agreed with me….

“”This should provide a significant boost and help stimulate the building industry in the current financial crisis,” he said. “But it’s important to make sure we have the land available to keep up with supply.”

Real estate agent Anthony Toop said the number of first-home buyers would increase by between 20 per cent and 30 per cent. “This really allows them (first-home buyers) to re-enter the market,” he said.

Mr Toop said house prices could increase slightly but the main concern was the number of affordable properties available to the first-home buyer.

HomeStart Finance chief executive Gary Storkey said more than 40 per cent of potential first-home buyers who have called HomeStart over the past year would now be able to buy a house.

“For those people who don’t quite have enough savings to get into home ownership, the increase to the First Home Owner Grant will enable them to get across the line,” he said.”

http://www.news.com.au/business/money/story/0,25479,24498492-5013951,00.html

The whole package (not just FHOG) is political. It’s like something out of the Hollowmen, except I’m not laughing.

> Justbands, you can only prop something up for so long before natural market forces push something towards its intrinsic value

In the meantime it’s helping to stimulate the building industry in the current financial crisis.

Justbands, you can only prop something up for so long before natural market forces push something towards its intrinsic value

In a “normal” economic climate, sure…this would be a little crazy. However it’s not a normal economic climate. Drastic situations require drastic action sometimes. Seems to have been fairly well received by many economic & political observers.

I am a young first home buyer and I realise it is gibberish policy.

However, you better believe jakez is going to take that money.

NRAS?

Wait for NRAS, and see a bit more of a shift in the housing state of play.

I dont think that this was a sensible move & expect to see a shift upwards in housing prices as a result. the co-contribution savings scheme was a much better policy at addressing housing affordability for first home owners.

Interestingly there was a segment on the Hack Half Hour last week which covered the very issue of owning your own home and whether it was a crock. well worth watching.
http://www.abc.net.au/triplej/hackhalfhour/programs/s2377292.htm

those first home buyers about to immediately enter the market will benefit – but then shortly i predict that *amazingly* house prices (in the lower end of the market more than anything) will jump by the amount the FHOG is being increased! so in the end, the real ones to benefit from this will be state/territory governments (more stamp duty), real estate agents (more commission), and those who already own investment properties.

I was really hoping that the mortgage bust thingy (I have a firm grasp on international finances…) would crush the Canberra property market, providing lots of cheap houses (as poor families are evicted and forced to live on the street) so that I have a chance to buy one.

Oh boo hoo. Kevin & his mates have got MUCH bigger issues to address than the cost of a house for YOU in Canberra. Very, very loose Canberra connection there too I might add.