Tag: First Owner Grants

The Big Lie About First Homeowner Grants… [Podcast]

In recent years we have seen a swathe of “initiatives” from state and federal governments with the aim to encouraging and helping more first-time buyers into the housing market. The previous Government claimed they had helped “hundreds of thousands” into the property market.

The latest ABS statistics shows that the number of First Time Buyers is falling again – and the part peaks map directly onto Government “stimulus” measures.

The latest is the Albanese Government release of 40,000 new places under the Federal Government’s Home Guarantee Scheme, which will enable eligible first home buyers to purchase a property with a deposit of as little as 2% or 5%.

This as a time when the Reserve Bank of Australia is aggressively increasing rates and house prices are expected to plunge by between 10% and 20%, depending on the forecast. What could possibly go wrong?

In fact, the evidence suggest that these schemes are ineffective. Indeed, the long-term trends in terms of home ownership shows that across Australia, a smaller proportion of people own their own home, and those that do have bigger mortgages for longer. The latest Census data, which is still in the process of being released continues to confirm this trend.

Home ownership rates in Australia have declined over several decades, and the likelihood of attaining home ownership by age 30 has fallen substantially. Go back two decades and the average age of a first time buyer was 27 year, today its 34 years and rising based on my surveys. In addition, especially in Sydney, Melbourne and Perth, first home buyers (FHBs) are now buying fewer houses and more units, and evidence shows that more are receiving parental assistance.

Also while mortgage repayment affordability stress has been cushioned by falling interest rates until 2022, mortgage deposit requirements have risen with prices and become an increasingly serious constraint—far more so in Sydney and Melbourne than elsewhere.

I have long argued that this First Home Owner grants are bribes which distort the market, lift prices and are more designed to assist the construction sector. In other words, First Time Buyer Grants are a con.

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
The Big Lie About First Homeowner Grants... [Podcast]
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The Big Lie About First Homeowner Grants…

In recent years we have seen a swathe of “initiatives” from state and federal governments with the aim to encouraging and helping more first-time buyers into the housing market. The previous Government claimed they had helped “hundreds of thousands” into the property market.

The latest ABS statistics shows that the number of First Time Buyers is falling again – and the part peaks map directly onto Government “stimulus” measures.

The latest is the Albanese Government release of 40,000 new places under the Federal Government’s Home Guarantee Scheme, which will enable eligible first home buyers to purchase a property with a deposit of as little as 2% or 5%.

This as a time when the Reserve Bank of Australia is aggressively increasing rates and house prices are expected to plunge by between 10% and 20%, depending on the forecast. What could possibly go wrong?

In fact, the evidence suggest that these schemes are ineffective. Indeed, the long-term trends in terms of home ownership shows that across Australia, a smaller proportion of people own their own home, and those that do have bigger mortgages for longer. The latest Census data, which is still in the process of being released continues to confirm this trend.

Home ownership rates in Australia have declined over several decades, and the likelihood of attaining home ownership by age 30 has fallen substantially. Go back two decades and the average age of a first time buyer was 27 year, today its 34 years and rising based on my surveys. In addition, especially in Sydney, Melbourne and Perth, first home buyers (FHBs) are now buying fewer houses and more units, and evidence shows that more are receiving parental assistance.

Also while mortgage repayment affordability stress has been cushioned by falling interest rates until 2022, mortgage deposit requirements have risen with prices and become an increasingly serious constraint—far more so in Sydney and Melbourne than elsewhere.

I have long argued that this First Home Owner grants are bribes which distort the market, lift prices and are more designed to assist the construction sector. In other words, First Time Buyer Grants are a con.

Go to the Walk The World Universe at https://walktheworld.com.au/

Lenders sought for the First Home Loan Deposit Scheme

The National Housing Finance and Investment Corporation (NHFIC) is starting detailed consultations with lenders regarding their potential participation the Federal Government’s new First Home Loan Deposit Scheme, via Property Observer.

The Scheme is scheduled to commence on 1 January 2020.

It will be administered by NHFIC, subject to the passage of legislative amendments, which have been introduced into the Parliament today. 

It is known as the National Housing Finance and Investment Corporation Amendment Bill. Michael Sukkar, the Minister for Housing, presented the bill.

It seeks to establish a First Home Loan Deposit Scheme to assist eligible first home buyers with a minimum 5 per cent deposit (rather than the industry standard of 20 per cent) to purchase a home.

NHFIC is seeking feedback from lenders on implementation of the Scheme via a market sounding consultation process.

This market sounding is the pre-cursor to a procurement process which will be used to establish a panel of lenders to participate in the Scheme.

It builds on initial stakeholder consultations undertaken to date. 

All residential mortgage lenders are welcome to participate in the market sounding process.

NHFIC is making a Scheme Features paper available to participants for the purposes of the market sounding process. 

Further information on the market sounding process, including how lenders can participate and obtain a copy of the Scheme Features paper, is available via the NHFIC website

Responses to the market sounding are required to be submitted before 5pm AEST on Thursday 3 October 2019. 

The introduction of legislation giving effect to the Commonwealth Government’s deposit gap scheme is the first step in easing the pathway to home ownership, according to the Urban Development Institute of Australia (UDIA).

The UDIA’s National Executive Director Connie Kirk has welcomed introduction of the legislation and said the next critical step was getting design features right.

First Home Owner Grant To Double In Regional Victoria

The Victorian Government has announced the First Home Owner Grant will be doubled in regional Victoria. The Grant will increase from $10,000 to $20,000, commencing 1 July 2017. The Government expects up to 6,000 first home buyers will receive extra assistance.

This is in addition to the recent land release announcement.

The increased grant will be available to first home buyers building new homes valued up to $750,000, and is an additional $50 million investment in regional Victoria over the next three years.

The grant will be applicable to contracts signed from 1 July 2017 to 30 June 2020, at which time, the Government will review the benefits for first home buyers and businesses in regional Victoria.

However, our analysis of such grants, not only here but overseas is that they simply lifts prices by the same amount. It is a zero sum game.

Whilst we understand the political agenda, this move is unlikely to improve housing affordability and access to property.