By: puyi
25/05/2009
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Source: The Australian newspaper
By Nick Tabakoff and Joe Kelly | May 25, 2009
THE average loan size for first-home buyers has risen by $52,000 - or 23 per cent - in the past two years, raising fears that government incentives for young buyers are artificially inflating the market.
A report commissioned by Brandmanagement, a market research firm specialising in the finance sector, says the average size of loans being taken up by young home buyers is jumping by an "unsustainable" amount.
Brandmanagement's principal, Andrew Inwood, said the statistics - which indicate that property prices are rising in line with loan sizes - have raised questions about whether the grant was simply being used by consumers to buy into a bubble.
"What the government incentives appear to have done is transfer the money from the people who are borrowing money to buy their first homes into the pockets of those who are selling at a more attractive price," he said.
Mr Inwood hinted that this mini-boom in the price of properties would not go on forever.
"There'll be a collapse in those prices again," he said.
Australian Consumers Association spokesman Christopher Zinn said the rapid growth in loans to first-home buyers against the backdrop of the government incentives carried certain moral obligations for banks.
Even real estate agents admit that the government incentives are creating an unsustainable bubble at the more affordable end of the property market.
Legendary Sydney luxury property agent Bill Bridges said yesterday some agents on entry-level real estate were "loading the prices up" to capitalise on the first-home buyers scheme.
Mr Bridges is also pessimistic about the ability of many people taking up first-home buyer grants to service loans into the future.
He expressed concerns that if people are stretched beyond their means through incentives, "it will all end up like (the sub-prime mortgage situation in) America". |
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By: o410e2003
22/05/2009
10:34 am Yahoo! Profile:
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Absolutely correct! Government cash handouts for any product or service artificially stmulates demand for that product or service which then increases cost push pressure and the product or service ends up costing the consumer more than it otherwise would. This skews structural market efficiency which is corrected when the handout is removed and leads to deflationary effects. Just check out the increased cost of insulation, rain water tanks, solar power modules etc.
Let's face it - putting the country's monetary and fiscal decision making in the hands of politicians is really a joke. Having worked in the public and private sectors I have viewed fist hand poor decisions made by politicians and directors. The role of government should be policy otherwise we will continue to have deficits. Wayne Swan is not qualified to run the corner fruit shop and K_Rudd has spent his entire career in the public sector, so how can we expect them to run the country? They are clearly at odds with Treasury and the Reserve and place political opportunism above the country's future. These meatheads rely on spin and playing the man and display annoyance when their tiny brains are challenged. It's a pity that there is no real alternative with the other party, so our future will continue to rely on independants in the senate, which is akin to having our future decided by a local council. |
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By: puyi
22/05/2009
12:23 am Yahoo! Profile:
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Re:FIRST TIME HOME BUYERS -ARE YOU BEING FOOLED?
Observations on the Cost of Housing in Australia
Anthony Richards
Head of Economic Analysis Department
Address to 2008 Economic and Social Outlook Conference
The Melbourne Institute
Melbourne - 27 March 2008
<<On the demand side, it is now widely accepted that policies that simply give people more money to spend on housing are likely to be capitalised into higher housing prices. On the supply side, efforts to improve housing affordability should be focused on policies regarding land use and on improving efficiency in the supply of land and housing.>>
The first Home buyers Grant does absolutely NOTHING to improve housing affordability and does NOT HELP first home buyers as taxpayers money is simply used to inflate the price of the properties.
Only policies leading to an increase in the supply of properties will genuinely help first time home buyers, builders, plumbers, electricians, gardeners, etc. And more affordable houses will lead to more property transactions both from first home buyers and property investors. And more transactions will lead to more jobs for estate agents and more overall tax revenue for state governments.
If products are priced too high, there is a very high risk of a fall in price and nobody would be interested to buy. And this will lead to no job and no commission for estate agents. |
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By: stephn@ymail.com
13/05/2009
5:10 pm Yahoo! Profile:
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| No, I didn't get the Govt I voted for. Geminii, of course Wayne Swann does not come up with this himself. However, surely the powers that be give the treasury an outline of what they want the final outcome to look like and the treasury comes up with a model based on that? I think someone who has a clue on how to run a business might have a better idea of how to run a country's economy. After all ultimately isn't that what it is? |
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By: yvonneisobel@y7mail.com
13/05/2009
9:10 am Yahoo! Profile:
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| You never spoke a truer word, Well said...its going to be a big kick in the butt, for those that voted tis gov into power. Also why do pensioners have to wait another four mths for their increase, they are starving now, give them a break. VOVO |
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By: geminiipaul
12/05/2009
8:48 pm Yahoo! Profile:
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| The federal treasury does the economic modelling and then presents the options to the government. Most of the budget is prepared by treasury. Don't be fooled into thinking that Wayne Swann burns the midnight oil spending countless hours on his calculator. If the opposition were in power the Federal Treasury would be presenting them with the same economic modelling and they would be presenting a similar budget. |
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By: jps1038
12/05/2009
8:48 pm Yahoo! Profile:
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Yep-Australians are so stupid. THey deserve what they get. The only consolation is that educated Mums and Dads didnt vote these mugs in. It was the 18-23 age group, who never experienced Keating or Hawke. Lets see them own their own homes now. Even with the extended grant, they'll be out of the job before the first anniversary.
Typically, the budget pays nothing back until the next election. So we don't feel the pain until AFTER we vote next.
Yep-they did it again. Just hold on to your hats for 18% Keating style interest rates within 5 years. |
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By: steveok@y7mail.com
12/05/2009
8:39 pm Yahoo! Profile:
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| You got the government you voted for so don't complain. I cannot believe after all the incompetence we have put up with the numskulls running NSW the greater population still voted this bunch of tools in to run the joint. I have lost all faith in common sense. |
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