WA Government begs for sub-prime first home buyers

We noted yesterday how the Real Estate Institute of Western Australia (REIWA) have demanded additional first home buyer (FHB) subsidies to lift Perth’s dead market, including reintroducing the $7,000 First Home Owner Grant for established properties and increasing the stamp duty exemption threshold for FHBs.

Now, the McGowan State Government has launched a TV advertising blitz trying to encourage low-deposit FHBs to enter the market. From The West Australian:

In July, the Government announced it was temporarily boosting income limits for potential Keystart customers, resulting in an additional 305 applications for home loans from previously ineligible applicants.

Yesterday, Perth MLA John Carey unveiled a new advertising push, pictured, for the government-backed lender, which provides finance to qualifying homebuyers with deposits as low as 2 per cent…

“We are launching a major new campaign to get the message out to West Australians that it has never been a better time to enter the housing market,” Mr Carey said.

He denied it was irresponsible to be encouraging first home buyers into a falling market. “The advice is now that the market is stabilising,” he said.

The McGowan Government has promoted its loosening of Keystart income eligibility criteria as a stimulus measure because many clients elect to build their own homes, providing a boost to the construction industry.

This scheme is obviously not about improving affordability, but rather represents a blatant housing stimulus package. On this front, it could actually make the housing oversupply even worse, assuming that a large share of the Keystart loans are indeed used for new builds.

Despite falling heavily, Western Australia’s dwelling construction is still running well ahead of population growth:

In the year to June 2019, 15,608 dwellings were commenced in Western Australia versus a 26,000 increase in population: a ratio of 1.7 people per new dwelling.

In fact, the oversupply is so bad that the REIWA recently called for an increase in migrants to help fill the empty homes:

POPULATION growth supports the property market, employment and the economy according to Reiwa…

[REIWA President] Damian Collins… is calling on all political parties contesting the Federal election to commit to putting Perth back on the Regional Migration Scheme to attract skilled workers and fill the current oversupply of housing…

“The Federal Government has control of key levers of economic growth that directly link to the health and sustainability of local property markets.

Nothing like kicking the proverbial housing can down the road.

Comments

  1. “In fact, the oversupply is so bad that the REIWA recently called for an increase in migrants to help fill the empty homes”

    This is classic Keynesian tripe. Instead of simply decreasing supply so the market clears and prices firm up they want to artificially boost demand.

    You know the crack: “Lack of aggregate demand.”

    Next Govt wheeze will be: “Boost jobs to lower unemployment among immigrants.”

    You couldn’t make this up. Sheer lunacy.

    • Government handouts to the less well off are always designed to enrich the well off. These government grants are purely handing the money over to the middlemen(the FHB) then directly to the developer/ land owner/. WA Labor government is generally a great government in terms of decisions made such as assisted dying bill but they still subscribe to the ABC/ SBS led PC B.S.

    • “increase in migrants to help fill the empty home”… they may be able to fill em but without a job they won’t be able to pay for it. The dog boxes that are built and continue to be built are perfect for them.

      • Correct. And this is what my argument has been for some time. Importing people has its limits.

        It’s about whether people have the means to exist here or not. If not, they’ll live under a bridge or leave.

  2. St JacquesMEMBER

    It’s a (black) swan dive. Pay attention Sydney and Melbourne, it’s your future, but not yet. The best is being saved for last.

  3. 25978 population increase in Western Australia To March 2019

    32794 births in last year = do not need a house for a long time
    14903 deaths in last year = a sizeable portion of deceased estates
    8025 left the state in interstate migration = more rentals available or houses sold
    16112 overseas migration into the state = housing reqd, certain percentage of families

    I would think deaths and interstate migration would just about provide enough housing to cover overseas migration into WA.
    Therefore no housing construction needed I believe.

  4. If over supply is increasing isn’t this good for people yet to buy? I can’t see this as bad news unless someone bought at the peak. I’ve seen some odd pricing in Perth recently. In a average suburb a single town house 4×2 in a group of 4 is advertised by the builder at 640k. Right next door is a whole block with a swimming pool and 4×2 house advertised at 602k. I can’t make sense of it.

  5. Uranium GeoMEMBER

    LOL at the TV advertising campaign. Most of the demographic for first home buyers I know don’t watch free to air TV, or even have their idiot box connected to an aerial.