Politicians haven’t thought through latest first home buyer scheme, property expert says
Newly announced first home buyer measures by the Coalition and Labor have not been properly thought through and won’t work, a property analyst claims.
The Liberal Party announced earlier this week it would offer first home buyers a helping hand with a scheme designed to help them purchase with just a 5 per cent deposit.
Bill Shorten’s Labor Party followed the proposal up with a pledge to match the policy if it won the federal election on Saturday.
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But Hotspotting founder Terry Ryder explained in a Property Observer column that the policy failed to address the root causes of Australia’s housing affordability problems.
“The biggest recurring problem for real estate is politicians who don’t understand the industry,” he said. “What they’ve served up just fiddles around the edges of the problem.”
Mr Ryder said one of the flaws in the Liberal’s First Home Loan Deposit Scheme is that it will be available to only 10,000 buyers a year.
It also does not address the barrier presented by high home prices, he said.
Labor’s proposal to restrict negative gearing tax concessions to only new properties would also fail to make housing more affordable, Mr Ryder said.
He called the major parties’ housing proposals a choice between “dumb and dumber”.
“Labor’s core policy is changing negative gearing tax benefits. This is a revenue measure dressed up as a policy to improve housing affordability,” Mr Ryder said.
“Clearly it won’t make a positive difference, while creating myriad problems elsewhere.”
He added that the policy would put first home buyers in direct competition with investors for new properties.
“(Labor) say they want to prevent first home buyers having to compete with investors … (but) currently most first-time buyers have to buy or build a new home if they want a state grant.
“Now Labor says investors will get tax benefits through negative gearing only if they buy new. So everyone will be compelled to buy new rather than established property.”
The main cause of housing unaffordability was the high cost of building new houses, which were being pushed higher by rising property taxes such as stamp duty, according to Mr Ryder.
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“All three levels of government milk real estate for revenue. They treat the housing industry as their favourite cash cow.
“Every time a state or territory government brings down a budget, it adds to the affordability problem by increasing existing imposts or imposing new ones.”
Mr Ryder summed the federal election up as “not much of a choice of voters who care about the housing industry”.
“Labor proposes to increase the taxation burden on the real estate industry, which will worsen the problem, and the Liberal pitch may make it easier for first homebuyers to get a loan to buy a home, but it won’t make the cost of the home cheaper.”