Opinion: Policies That Help First Home Buyers

Ace26 on 23/02/2016 - 12:45

I’ve been hearing all the goss of removing negative gearing on property and make it a level field for first home buyers. There had been a lot of discussions and threads on this topic already.

As the purpose of this discussion currently is to help first home buyers get into market, I thought the following policy suggestions might actually help achieve the goal

  1. Differ stamp duty (i.e. instead of charging upfront stamp duty, let the home owners pay it over a period say 20 years along with their council fee) or even better not charge it at all.
  2. Allow first home buyers to access their super balance to pay a deposit (with some restrictions similar to SMSF and more. E.g. if property is sold then money should be returned to super)
  3. Allow first home owners to claim tax deductions on interest charges (not depreciation) on their principle place (then subject the property to CGT when sold) (one property per person for life)
  4. Include value of principle place of residency in income test when calculating age pension (If someone owns a $2m house then they should support themselves in retirement)

Re: Speculative buying by investors and the ways to kerb it is another topic all together and don’t want to cover this here.

What do you think?

Poll Options expired

  • 8
    I agree with some of the ideas
  • 1
    I agree with all of the ideas
  • 17
    I don't agree at all
Financial

Comments

  • djones145 on 23/02/2016 - 13:07
    +4

    need another policy, "get a better job policy!" as joe hockey the ex treasurer said, "The starting point for a first home buyer is to get a good job that pays good money"

    as u can see that policy failed when he got ousted!

    • zealmax on 23/02/2016 - 14:03
      +3

      As I have been telling my wife, there is nothing expensive in this world. I just don't earn enough.

  • boomramada on 23/02/2016 - 13:12
    +5

    Its not hard to get a first home, save money or/and get a better job.
    You should be able to save $$ for stamp duty or just don't buy a house at all. Its a long term financial commitment.
    And don't buy a castle as your first home.

    Each time gov introduce Stamp duty reductions, house price goes up, so there is no real savings.

    • tomleonhart on 23/02/2016 - 13:35

      I don't know why you got negged but what you said is mostly true.

      • Oddmog on 23/02/2016 - 22:25
        +2

        Lot of people are just treading water.

        Bottom end in Sydney is 400k at least and if you're on 50k a year you still need to live as well. Good luck saving up when wages don't keep pace with the inflation in the cost of living but you still need to clothe feed and house yourself.

        Getting a better job is possible for some but not everyone has the mobility. We've reached a point where the average place is now twelve times the average salary in Sydney so you've really got to be earning decent coin or combining incomes to afford a place. The days when a place was only three times the average salary are long gone and it is really just that simple that housing has quadrupled or at least tripled in price in real terms.

        • boomramada on 24/02/2016 - 09:30
          +1

          Lots of people live beyond their means these days. You can't have it all. Most want their three bed room house in Sydney, Eneloop collection, Chromecast ??? seriously?? , the iPhone 6 and doing the same job in same location rest of your life with your family and friend close by. You have to give it in from some where.

          Not saying every one need to trade water, but people can change, lifestyle or where they work, what they do and where they live.

  • JetLi on 23/02/2016 - 13:24
    -1

    Maybe lower expectations for your first home, similar to first jobs, many purchased a crappy home just to get in the market and worked their way up from there, not a fan of selective concessions/policies.

    The administration of some of those policies listed would be a nightmare, who's going to track the repayment of stamp over such a long period of time? What if people draw down on their original mortgages for personal expenses or renovations, do they claim interest expense on that component as well?

  • akd on 23/02/2016 - 13:33
    +2

    Interestingly in ACT, the government plan to reduce/abolish stamp duty by increasing Rates every year for everyone. The stamp duty has reduced but the rates have almost increased 40% in last 3-4 years. You decide whether paying big stamp duty one time is good or paying increasing rates every year.

  • mskeggs on 23/02/2016 - 19:03
    +2

    All of your suggestions except the last would cause further price inflation in the first home buyer category. Just as the first home owner grants did. The last suggestion is unlikely to free up properties suitable for first time buyers, and the trickle down effect will mean any improvement is diluted across the whole real estate market, as the elderly usually own the most valuable housing stock.
    You need to consider options that favour increasing the supply of properties in the first buyer segment (lower cost apartments and houses) and policies that increase the costs for investors seeking to buy in those categories. This is because an investor can currently take advantage of negative gearing to afford a higher monthly payment than an owner occupier, all other things being equal.

    Labor is proposing a pretty good model if affordable housing for first time buyers is your goal.

    • Ace26 on 23/02/2016 - 20:32

      Personally I am not a first home buyer, the reason I started this thread was to see how others think about providing solutions to first home buyers to get into market.

      • Oddmog on 23/02/2016 - 22:33

        I think a lot of people will be priced out full stop.

        At this point housing needs to be looked at as a social issue rather than just a market commodity. No one is willing to crash the market dramatically but you still need functional people doing work be it teachers, nurses, tradespeople ect.

        Not exactly a huge fan of public housing and estates being a go to measure but I can't exactly see wages matching up with housing price inflation anytime soon. A million dollars for the average place and that's not a mansion is a reality in Sydney and half a million is considered cheap.

  • scupper on 24/02/2016 - 23:25

    Funny how the Libs are saying prices are going to go up AND down at the same time. Labor's policy seems quite good. It will move the investors towards newer housing stock. Sellers of older property will have only home buyers being interested, which means the price will be more "reasonable" as a higher cost can't be subsidised by negative gearing. If the seller isn't happy with the price, they don't have to sell. Malcolm's scaremongering of houses losing value doesn't hold water since it only affects owners wanting to sell or those wanting to refinance, in which case, they may have bought at a price higher than the market would normally bear. If so, it's a burden for them to bear and not for new prospective home owners.

    I guess for home buyers wanting new stock, it will be as per normal, i.e. they will be competing with investors so the prices will stay relatively high. And to combat that, then negative gearing has to be fixed.

  • tonyjzx on 25/02/2016 - 13:48
    +1

    I think the central conceit is that there is more demand than there is supply and in these above examples, you are increasing demand and hence increasing prices when your expectation is the opposite.

    Also I kind of believe 'owning a house' is a slightly out of date concept when you are tying up capital for 30yrs… eg. if I want a modest place for $500k and I'm lucky enough to have $100k deposit, I'm still up for a $400k loan which is what? $2,800? $3,000 a month?

    Not saying renting is great but both alternatives are kind of an albatross in their own way.

  • BestofOZB on 25/02/2016 - 21:57

    IMHO negative gearing is just a stupid idea, I don't know how it was introduced at the first place!

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