The Real Estate Institute of Australia (REIA) is becoming farcical. Despite the strong pick-up in housing finance approvals since the beginning of the year, it is once again urging the new Federal Government to boost stimulus to first home buyers (FHBs), whose demand continues to wane. From today’s REIA media release:
“The proportion of first home buyers in the number of owner-occupied housing finance commitments fell to 14.7 per cent compared to the June figure of 15.1 per cent. The figure remains persistently low compared to the long-run average proportion of 20.1 per cent despite seven interest rate cuts since November 2011.”
“In large part, this drop can be attributed to State Governments withdrawing previous levels of support for first home owners buying established dwellings and it is established dwellings that 80 per cent of first home buyers prefer”…
“With the proportion of first home buyers remaining consistently below the long term average, this needs to be a high priority issue for the incoming Government,” concluded Mr Bushby.
I agree that FHBs should become a focus of the newly elected Abbott Government, but not via expanding subsidies, which Saul Eslake last week showed has done absolutely nothing to boost home ownership rates over the past 50-years or improve housing affordability.
Instead, as argued by Eslake, the Government should consider winding back negative gearing and removing planning-related bottlenecks, so that FHBs don’t get out-bid by investors and developers are better able to supply housing at a price that FHBs can afford.
Not that you will ever hear the REIA argue for these structure approaches. To them, it’s all about increasing FHBs ability to pay ever higher prices.
