Back in February, after first home buyer (FHB) mortgage demand collapsed in New South Wales and Queensland, I made the following statement:
Expect political recriminations to fly over first home buyers being ‘locked-out’ of home ownership, as well as increased special pleading from the property industry demanding that taxpayer funds once again prop-up the market.
As expected, the Real Estate Institute of Australia (REIA) has today issued a media release lobbying the Federal Government to attack the states over their cuts to FHB grants on pre-existing dwellings:
In 2000, an InterGovernmental Agreement (IGA) was made that states’ assistance to first home buyers would be “uniform” and that “an eligible home will be new or established”.
More first home buyers will be left out in the cold according to the Real Estate Institute of Australia (REIA), following the announcement by the Tasmanian Government to end the $7,000 First Home Buyer Grant in that state.
REIA President, Mr Peter Bushby says, “Governments of Queensland, New South Wales, South Australia, Victoria and now Tasmania have either ceased providing assistance to first home buyers purchasing established housing or have indicated that they will be ceasing to do so by July 2014.”
“Not only is this in breach of the IGA on Federal Financial Relations but it also ignores the evidence that 80 per cent of first home buyers have a clear preference for established housing.”
“REIA has been lobbying hard against this breach of the IGA however we are still to hear what the Commonwealth will do.”
“The impact of the decisions by the state Governments is clear in the plummeting number of first home buyers. Despite cuts in the official interest rate by the RBA to levels not seen for decades, the proportion of first home buyers decreased to 14.2 per cent in March 2013.”
“The socio-economic demographic of most first home buyers shows a clear preference to living close to existing facilities and work as opposed to buying in new housing estates. Lifestyle, environmental impact and proximity to public transport all play a part and that’s why 80% of first home buyers choose established dwellings,” concluded Mr Bushby.
If the REIA was truly concerned about the plight of FHBs, it would lobby for an end to negative gearing and a relaxation of planning and other supply-side constraints that prevents the supply of affordable housing. Instead, here they are lobbying the Federal Government to continue a policy that is unambiguously inflationary for house prices and self-defeating for FHB affordability.
Always bet on self-interest…
