whitesand

I totally, absolutely agree with the above. This helping get on the property ladder has caused this crisis in the first place by over-extending the ambitions of those who can't really afford it. Help to get on the debt railroad is more appropriate.

bcworld

http://www.thebull.com.au/articles_detail.php?id=1372

First Home Buyers with the most vulnerable jobs, lowest incomes, and the lowest net worths, have thus been enticed into debt at a time when the rest of society is busy de-leveraging

The First Home Owners Boost (as it is officially known) has certainly given the Government bang for its buck. By spending roughly $200 million of its own money to date, it has added about $3 billion to the housing market. But the additional $2.8 billion has come from increased mortgage debt taken on by those most vulnerable to a serious economic downturn, at a time when the latest "unexpected" increase in unemployment indicates that, like it or not, the global downturn is coming our way.

America tried a similar trick in 2000, when the collapse of the DotCom bubble threatened to cause a serious recession: it was called Subprime Lending. There should be little doubt now that that scam – which at the time received substantial government backing – simply delayed the day of reckoning, and made the eventual crisis much, much worse.

With Australia’s belated version of Subprime-Lite, we appear to be making the same mistake (The Sunday Telegraph made this issue their page one lead today – "House Price Crisis Looms" – and followed up with the feature Our home-grown sub-prime crisis). It’s on a smaller scale, and the borrowers aren’t so transparently uncreditworthy. But we are attempting to avoid an economic crisis caused by too much borrowing, by encouraging the poorest in our community to take on yet more debt.

teppic

I wonder if the Grant is removed...will the prices or bank deals for FTB's come down to reflect this???

My money says it wont.

NKSK version 2

Doesn't quite work like this though does it?
10% unemployment means that some will be forced to sell depressing the market as a whole - and affecting the other 90%.

kez81

I think it has made prices rise, whats a crappy $21,000 when you have paid well over what the house is even worth.

Cant rain all the time2

Regarding stamp duty, as far as I'm aware in S.A it is still 4%

ABCDiamond

SA is the 2nd highest State for stamp duty, and lousy on first home buyers concession.

eg:
SA - $ 80,500 or less = No Duty : Over 250,000 = Full Duty
and compared to QLD:
QLD - $500,000 or less = No Duty : $550,000 or more = Full Duty

Actual SA stamp duty rates are:
$300,001 to $500,000 = $9,500 plus $5.50 per $100 or part thereof in excess of $300,000.
$500,001 to $1,000,000 = $20,500 plus $5.75 per $100 or part thereof in excess of $500,000.
$1,000,001 and over = $49,250 plus $6.75 per $100 or part thereof in excess of $1,000,000.

again compared to QLD:
Up to $350,000 = $1.00 for each $100 or part of $100
$350,001 to $540,000 = $3,500 + $3.50 for every $100 or part of $100 over $350,000
$540,001 to $980,000 = $10,150 + $4.50 for every $100 or part of $100 over $540,000

dpande

Rents are not soaring, they are falling.
Unemployment of 10% will reduce them further.

The FTB who jumps on the property ladder now is very very unlucky by any measure.
The fact that the % of them who are taking fixed rate loans is at historic lows suggests they haven't really thought this through very well.

Tooterelli

Rents are dropping. Same happened in London when we left in Sept 08. So much property available on the market.

I've just picked up the City South News, Brisbane and the headlines are

Squeeze eases. More choice for renters as sales stall.

ABCDiamond

I think they are thinking too much... they are thinking that rates are still dropping, and they are hearing the expects say that we have more rate cuts to come, and they are thinking that they will hold on a bit longer before locking in....... at least that's the thinking of the ones I have spoken to.

Unfortunately they do not yet understand the difference in movements between variable and fixed rates...

They should stop thinking, begin to panic, and lock in now for about 15 years !!!

ABCDiamond

I can only go by my own recent experiences, with renters paying increased rents on new terms.

But to double check....
a few article headlines......

• A shortage of low-cost rental properties has resulted in a scramble among potential tenants to find ... 15/04/2009 23:26 Sydney
  
• Renters are being warned to expect more pain after the number of new homes built in the last quarter plummeted. Dec 2008 (and this is from www.tenants.org.au)
  
• A housing advisory group warned that the country could face a shortfall of up to 1.5 million homes in 20 years if construction did not increase.

However, I do agree that the higher priced rental properties have seen some drops in price and will see more, very much in the same way as property prices in the high and low brackets are also moving in different directions.

IvanM

Latest on Murdoch press is that FHOG bonus may stay.

Zambia

The grant in my opinion simply keeps the market going thus keeps prices at a unsustainable level.

You find prices start dropping when folk just cant afford to buy a house then the prices dip to their level in order to get a sale.

Any of us departed from the UK in the last year have seen the market in the UK and Ireland react in this way. I really want to buy a house is the market was strong I could justify buying one as it would rise in value and if I wanted to move area I could sell it and buy another. However if I bought and the market was weak I may not be able to sell the house ,never mind at a profit. Then I am sort of screwed.

So in short I have no confidence in the market the grant and the will it wont it stay does not help either, hence I wont dive in. Until everyone like me suddenly does have confidence in the market well then we will see a change.

ABCDiamond

Albeit maybe in a slightly changed way...

One option being considered is limiting the bonus to only new home construction.

A newspaper poll:

Should the Rudd Government drop the first-home buyers' grant?

52% Yes - It's inflating house prices
47% No - First-home buyers need help

Common Sense tells me that it should be changed, together with Stamp duty to:

• Only for New Properties (to aid the building industry)
• Nothing for anyone where a property is over the median value for the area.
• A sliding scale based on property value % of the median value for the area

The main gainers should be those who choose an inexpensive New property only, so that Builders gain work, and more emphasis is put on building cheaper more affordable property.

I know it can't be that simple, as it would already be in place if it was, as I have thought like this for years, and I can't be the only one who has.

Burbage

The FHBG boost was to help home sellers, not home buyers. Without it prices would have fallen much more by now. The best thig the government could have done to assist home buyers would have been to abolish the grant altogether instead of boosting it. Prices would have fallen, buyers would have taken out affordable mortgages. Instead prices stayed up and people borrowed far more than they should have.