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First Home Buyers

First Home Buyers

Finally housing affordability is gaining the attention it deserves albeit long after the house has bolted. There are a multitude of reasons why Melbourne and Sydney have become prohibitively expensive but our focus should be on finding ways to ensure first home buyers are able to enter the market to prevent the emergence of a new generation of life-time renters.

It would be comforting to think that the problem is a simple fix of increasing supply but that alone is not going to resolve the barriers faced by first home buyers.

You only have to attend a few auctions to see that the young couples hoping to buy their first home with a deposit saved over many years often cannot cut it against the investor who has access to far deeper pools of money.

Investors are essential to increasing the stock of rental housing but there is an equal imperative to ensure first home buyers have a chance at home ownership.

That being the case, surely it’s time to even up the playing field and take a closer look at the assistance being offered to first home buyers. In NSW there’s the $15,000 First Home Owner Grant available to buyers of new homes, capped at $750,000. In addition, the First Home – New Home scheme provides stamp duty exemption on a sliding scale from $550,000 to $650,000.

What is needed right now is to bring these grants into the real world, where the median Sydney house price is over $1 million and apartments over $660,000. Those figures alone tell you that there would be very little call on either of these schemes. Certainly you can find apartments and houses in the outer suburbs of Sydney within this price range but they are rarely new builds.

And if you’re looking for a new apartment for $550,000 to take full advantage of the stamp duty exemption, well good luck with that.

The rates and terms for the NSW grants were set several years ago, before the boom that has seen Sydney prices skyrocket and at a time when the intention was as much to provide support for builders as it was to assist first home buyers.

Queensland, where property prices are a fraction of Sydney’s, recently reassessed its first home buyer incentives and since July has offered a $20,000 grant for new homes and stamp duty concessions on a sliding scale below $550,000.

Some of the measures the NSW Government can implement immediately to assist first home buyers are to make the grants applicable to new and existing property and adjust caps to a level that better reflects the price of property. Further stamp duty concessions should also be seriously considered given the impediment they pose to first home buyers purchasing property.

At a Federal level we also need a serious discussion about releasing super as a leg-up into home ownership. There is no greater asset in retirement than a home to call your own.

This is not a total fix but it addresses one aspect of the immediate problem. There is an argument that this type of tinkering has the inflationary effect of raising the price of real estate to the level of the grant. But if we have confidence in the levelling effect of increased supply the coming wave of new land and apartments should keep prices in check.

It is not acceptable to see future generations robbed of the opportunity for home ownership. And it’s not about keeping up with the Joneses or some remnant of a Menzian dream of a quarter acre paradise. For many people, it’s about the security that comes with owning the roof over your head, not subject to the whim or circumstances of a landlord. And most importantly, housing security at the end of your working life when income remains fixed but rents do not. With no housing security there is a very real risk that a large proportion of our future elders will face homelessness and poverty, something that government and the community should do everything to avert.

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