The fact that the government has come up with so many different ways to inject money into the property market (average price in Sydney for a home is now $1.4 million and $1 million in Melbourne) is the biggest warning that government intervention is adding to, not solving, housing affordability problems. .
The only part that recoups the value of the newer policy is the requirement that when selling their homes, people using the system must return the amount they invested plus a share of the capital gains when selling their homes.
But this immediately creates the effect of the second round.
In five or 10 years, when it comes time to move out of suburban Mill Park or Woodcroft for a bigger, better equipped, and more expensive home, our first-time buyers won’t get a full capital gain from selling their first home at their disposal.
By intervening in the market of first-time buyers, the government prepares a problem for the second-round market.
But this policy is about the here and now.
Both the coalition and the Labor could have come up with a policy of paying the “oversupply” bonus to local councils to change planning laws to increase the number of homes available in their areas. It would add to the supply, and do so at a much lower cost and wouldn’t have such big ripple effects in areas like retirement.
Unfortunately, this is very reasonable.
Less than six weeks ago, a parliamentary committee chaired by Liberal MP Jason Valinsky considered the idea of super use for housing – and did not recommend the form the government is now proposing.
It backed first-time buyers using their super accounts as collateral, arguing there were problems taking money out of their pension accounts and pooling it in the middle of a suburban house auction on Saturday morning.
“Allowing first home buyers to access or borrow against a portion of their superlatives to purchase a home, in the absence of an oversupply of housing, is likely to increase demand and drive up property prices,” the report warned.
Last week, Morrison attacked Albanese for his support of a 5.1 per cent increase in the minimum wage, warning that it will lead to higher interest rates as inflation increases.
What will an additional $50,000 in the hands of first-time buyers do to home prices? It is inflation and will put upward pressure on interest rates.
And those at minimum wages – almost all of them rent rather than buy – will be priced out of the real estate market.
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