Stamp duty tweaks for first home buyers

milkman said :

Interestingly, it’s a lot more common for both adults in a household to work now. Couple that with lower interest rates than the 90s and you get what we have now.

Interest rates aren’t actually low by historical standards now, it’s just that they were high in the 80s and early 90s. Interest rates were pretty similar to what we have today in the 50s and 60s, and were actually well bellow inflation for most of the 70s. The rates borrowers faced were pretty much around 4-6% from the 1930s to the mid 70s. The anomaly isn’t now, it’s ~1975-1997 or so.

Differences are that now banks will lend half a million dollars at the drop of at hat, whereas once upon a time you’d have needed a 20 or 30% deposit.
Not helped by:
-combination of negative gearing and very generous capital gains tax arrangements that encourage investors to pay way more than is justified based on rental cashflows and also encourage landbanking and speculative vacancies.
-idiotic grants to first home buyers that do nothing but push prices higher. Added to a deposit $7000 becomes an extra $60k or more even at ‘reasonable’ loan to value ratios, and people can still get stupid ratios like 95% and even 97% with mortgage insurance. Now consider that grants have been at times as high as 21k when boosted. The 21k at the height of the post GFC stimulus would have boosted the borrowing power of some buyers by as much as $400,000 compared to what they could have borrowed with no grants (because requirements for genuine savings are also waved at the drop of a hat) – we could have had a reasonable correction back in 2009, but instead the government poured gasoline onto the fire.
-restrictive planning systems and councils front-loading costs onto developers. Drip feeding of land onto the market. Now Melbourne and Adelaide are toying with urban growth boundaries.

When will people learn that stamp duty concessions only make the situation worse.

They artificially inflate the price of the homes by increasing demand without doing anything about supply. Thereby pushing prices higher.

Stamp duty concessions don’t end up in a better situation for the buyer, only a better situation for the seller.

The extra cash saved is simply added to the top of the price thereby giving more money to the seller of the property not the buyer.

And ask yourself this: why do 70% of Canberrans need a concession?

What we should be doing is encouraging people own multiple investment properties to sell. This frees up the bottom end of the market for people to enter.

All he government is doing is pushing housing prices higher and higher and MORE out of reach for new home buyers.

random said :

MrPC said :

Where does the $12,500 cash payment figure come from? The ACT revenue site clearly says the first home builders grant is $7k and the first home owners boost ended years ago.

Apparently it was/will be in the new budget — going from $7k to $12.5k. The twist seems to be that it will be, like the concessional stamp duty, available on new or “substantially renovated” properties only. No grant for established properties. That adds up to a very handsome gift to the construction industry.

“Where does the $12,500 cash payment figure come from?”

Good question but a better question is where is the $12,500 materialising from given that the budget will be in deficit.
Just how is the ACT Government going to fund these giveaways in the short term? Are they going to borrow money from China like their federal cousins?
Answers please Mr Barr.

Grail said :

arescarti42 said :

milkman said :

no you just got to buy a property that was around half the price (in real terms).

Much like their incomes at the time.

Wrong.

Prior to the mid 90s you could buy the median house for 3x the median income. Now the median house is 5-7x the median income depending on which city you live in.

House prices have massively outstripped incomes.

House prices are quite adequately tracking the 3x household income line. It’s not the baby boomers, it’s the multi-income families. As buying power increases, prices increase to match.

Interestingly, it’s a lot more common for both adults in a household to work now. Couple that with lower interest rates than the 90s and you get what we have now.

The only way for house prices to crash is massive unemployment. Even with the proposed ‘slash and burn’ of the PS, I think a genuine crash is unlikely. Look to the 1990s for a good example of what happened last time.

MrPC said :

Where does the $12,500 cash payment figure come from? The ACT revenue site clearly says the first home builders grant is $7k and the first home owners boost ended years ago.

Apparently it was/will be in the new budget — going from $7k to $12.5k. The twist seems to be that it will be, like the concessional stamp duty, available on new or “substantially renovated” properties only. No grant for established properties. That adds up to a very handsome gift to the construction industry.

Grail said :

arescarti42 said :

milkman said :

no you just got to buy a property that was around half the price (in real terms).

Much like their incomes at the time.

Wrong.

Prior to the mid 90s you could buy the median house for 3x the median income. Now the median house is 5-7x the median income depending on which city you live in.

House prices have massively outstripped incomes.

House prices are quite adequately tracking the 3x household income line. It’s not the baby boomers, it’s the multi-income families. As buying power increases, prices increase to match.

You’re pulling this out of your arse. The ratios quoted ARE household incomes. When ‘median income’ is quoted it’s pretty much always median household income.
Therefore multi-income families are already accounted for
– not that it matters, you’ve already shown yourself happy to pull ‘facts’ out of your arse to support your position ex post facto, so I’m sure you can find more where that one came from.

I can’t be bothered digging in tables so this will be a hatchet job, but:
http://www.censusdata.abs.gov.au/census_services/getproduct/census/2011/quickstat/0
for 2011:
median weekly household income: $1,234
*52 = 64168.
Now please tell me, where could I have bought a house for $192.5k in 2010? because that’s the median that your claim implies.
(actually you’d do alright for that in places like Wagga Wagga, but it’s certainly no where near the median Australia wide)
In actual fact Sydney’s median price was closer to $600,000
http://www.smh.com.au/business/property/demand-but-no-supply-as-prices-head-north-20100303-pj3z.html
and even adelaide was around $400,000
http://www.abc.net.au/news/2010-05-27/adelaide-median-house-price-405000/842960

I can’t really be bothered wasting more time on this, your claim so so clearly full of it that there’s really not much point going into ABS tables to prove it. It’s that bloody obvious, you’d have to be using a very special calculator to somehow come to the conclusion that median house prices are anywhere near three times median household incomes in Australia.

HiddenDragon said :

Shinigami_Josh said :

dungfungus said :

Bottom line, in my view, is that things will only change for the better in the fairly unlikely event that we get a bipartisan approach to the policies (not just negative gearing) which have produced the ridiculous property prices we now see in Australia. Andrew Barr’s announcements are a small, but apparently well considered and intentioned, step, or two, along a rather long road.

***http://www.smh.com.au/news/national/the-luckiest-generation-preboomers/2008/12/26/1229998733262.html?page=fullpage

There’s never going to be a bipartisan approach to lowering house prices in Australia. However as a byproduct of coming LIberal policies it seems likely that house prices will take a major hit in Canberra and given this is such a Labor town I can’t imagine that would worry the Federal Liberal party.

arescarti42 said :

milkman said :

no you just got to buy a property that was around half the price (in real terms).

Much like their incomes at the time.

Wrong.

Prior to the mid 90s you could buy the median house for 3x the median income. Now the median house is 5-7x the median income depending on which city you live in.

House prices have massively outstripped incomes.

House prices are quite adequately tracking the 3x household income line. It’s not the baby boomers, it’s the multi-income families. As buying power increases, prices increase to match.

Income caps and price limit still way too low. Thinking 250k income limit and 800k house limit would be fairer. We are talking first HOMES here, not dingy little IPs.

The cap is also stupid in that there’s no sliding scale. Could take 4 months off without pay to slide under 160K and ultimately come out ahead. No-one should be mulling that over.

milkman said :

no you just got to buy a property that was around half the price (in real terms).

Much like their incomes at the time.

Wrong.

Prior to the mid 90s you could buy the median house for 3x the median income. Now the median house is 5-7x the median income depending on which city you live in.

House prices have massively outstripped incomes.

Where does the $12,500 cash payment figure come from? The ACT revenue site clearly says the first home builders grant is $7k and the first home owners boost ended years ago.

Is this something about the cash back arrangements for landscaping, solar hot water, and ducted heating systems? Those don’t add up to $5.5k.

Shinigami_Josh said :

dungfungus said :

To all those advocates for first home buyers that blame babyboomers who own several properties for inflating property prices. We didn’t get any “99.99% concessions” on stamp duty or substantial handouts when we bought our first (and only) home.

no you just got to buy a property that was around half the price (in real terms).

In some cases, it may have been even less than half, in real terms (depending on what allowance is made for interest rates then, compared to now) but whatever the case, I don’t think housing affordability is just about baby-boomers vs the rest. There are plenty of “pre-boomers” *** who have done very nicely out of the system, and who are still very much alive and kicking and assiduously managing their wealth (including property), together with Gen-Xers (whether or not DINKS) who have the means to play the property market and finally, let us not forget some of the upwardly thrusting Gen Ys – already making nice incomes, and well able to take on a negatively geared investment property while still living at home with their boomer parents.

It is probably also worth mentioning that many of the people who are grumbling – not without reason – about property prices will, as a result of these inflated prices, be in line for some very nice inheritances from their parents and grandparents – so in these cases, it might essentially be a matter of deferred gratification.

Bottom line, in my view, is that things will only change for the better in the fairly unlikely event that we get a bipartisan approach to the policies (not just negative gearing) which have produced the ridiculous property prices we now see in Australia. Andrew Barr’s announcements are a small, but apparently well considered and intentioned, step, or two, along a rather long road.

***http://www.smh.com.au/news/national/the-luckiest-generation-preboomers/2008/12/26/1229998733262.html?page=fullpage

milkman said :

Shinigami_Josh said :

dungfungus said :

To all those advocates for first home buyers that blame babyboomers who own several properties for inflating property prices. We didn’t get any “99.99% concessions” on stamp duty or substantial handouts when we bought our first (and only) home.

no you just got to buy a property that was around half the price (in real terms).

Much like their incomes at the time.

No, the price/income ratio was way way lower prior to the big run-up in prices that started in the late 90s and went totally berzerk around 2001-3 (provoked by Howards ‘first home buyer’ incentives)
Prices way way overshot incomes.
http://www.rba.gov.au/speeches/2008/images/sp-so-270308-graph7.gif
also
http://www.rba.gov.au/speeches/2008/images/sp-so-270308-graph1.gif
Doesn’t really matter though, no discussion on here will change anything.
Boomers will still twist the facts to try and maintain the notion (at least in their own heads) that the massive capital gains they enjoyed were anything other than raw expropriation of income from future generations.

Of course the whole wretched structure – the housing racket and all the duopolies and other rent-seekers are making Australia seriously un-competitive, and with mining having peaked it’s going to become impossible to paper over. There’s bugger all point debating the justice of it or anything, gravity is taking over now.
Doesn’t mean we’ll necessarily have big nominal price falls though, exchange rate and imported inflation could allow for a reset in real terms without an actual crash, depending on whether the RBA will let inflation run high for a little while or not when the AUD starts really declining.

>baby boomers thinking first home buyers grants and other such concessions are there to help first home buyers
Oh dear.

I can’t really be bothered wading into this any deeper. Whatever.
http://www.youtube.com/watch?v=piVnArp9ZE0

Shinigami_Josh said :

dungfungus said :

To all those advocates for first home buyers that blame babyboomers who own several properties for inflating property prices. We didn’t get any “99.99% concessions” on stamp duty or substantial handouts when we bought our first (and only) home.

no you just got to buy a property that was around half the price (in real terms).

Much like their incomes at the time.

dungfungus said :

To all those advocates for first home buyers that blame babyboomers who own several properties for inflating property prices. We didn’t get any “99.99% concessions” on stamp duty or substantial handouts when we bought our first (and only) home.

no you just got to buy a property that was around half the price (in real terms).

😀 always entertaining

There are worse (far worse) things that the ACT Government could do with our money than spend it, as here, in a targeted manner designed to keep people in jobs – which should have flow on benefits for the economy more generally. That said, it will be most interesting to look at the affordability of this, and other Budget measures, in light of the plausibility of the forecasts for return to a balanced ACT Budget.

dungfungus said :

To all those advocates for first home buyers that blame babyboomers who own several properties for inflating property prices. We didn’t get any “99.99% concessions” on stamp duty or substantial handouts when we bought our first (and only) home.
At a time when governments should be showing restraint in spending (especially given the huge turnaround in the budget position predicted 12 months ago) Andrew Barr has gone beserk on a “cargo cult” program and he is annointing himself as some sort of hero for saving the ACT economy for the future recession that the coalition governmnent is supposed to be giving us. He is also quarantining the ACT public service (and their huge unfunded superannation liabilities) from culling.
The kangaroos in the ACT aren’t going to be so fortunate.
Barr needs to divorce himself from art exhibitions, sporting fixtures, tourism cocktail parties and drive around Canberra to see the empty shops and warehouses to get a true assessment of what has happened in the ACT while he has been treasurer.
The “triple your rates” prediction by the Liberals now seems to be a certainty.

Yeah because these types of policies are solely designed to help first home buyers.

Oh look, some flying pigs.

To all those advocates for first home buyers that blame babyboomers who own several properties for inflating property prices. We didn’t get any “99.99% concessions” on stamp duty or substantial handouts when we bought our first (and only) home.
At a time when governments should be showing restraint in spending (especially given the huge turnaround in the budget position predicted 12 months ago) Andrew Barr has gone beserk on a “cargo cult” program and he is annointing himself as some sort of hero for saving the ACT economy for the future recession that the coalition governmnent is supposed to be giving us. He is also quarantining the ACT public service (and their huge unfunded superannation liabilities) from culling.
The kangaroos in the ACT aren’t going to be so fortunate.
Barr needs to divorce himself from art exhibitions, sporting fixtures, tourism cocktail parties and drive around Canberra to see the empty shops and warehouses to get a true assessment of what has happened in the ACT while he has been treasurer.
The “triple your rates” prediction by the Liberals now seems to be a certainty.

Going to have to look in to this I’m buying now and have not paid stamp duty as yet might save me some coin

I’m confident the coming Abbott Government will flush the spivs out of the Canberra property market.