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.
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