Second home buyers get a bite of the grants cherry with first home buyers
In a new twist to stimulating the sale of new homes, the NSW Government has expanded the First home owners grant:
- To get first time home buyers double the grant [from $7,000 to $15,000]
- Give a new home buyers grant of $5,000 to anyone that builds or buys a new home, including second and subsequent home buyers that build or buy new housing.
This had to be good news for the home construction industry and the second home buyers, who typically could not afford new when they bought their first home.
The changing demographics of new home buyers
With more young people are seeking higher education and putting off making commitments with partners:
- Young adults are staying at home much longer [turning Japanese]
- or living in larger group homes [aping sit coms like Friends and New Girl?]
- So the first home buyer is getting older, and older, and maybe a little more savvy and cautious. So the age lines between first home buyers and second home buyers is getting blurred.
After all, Blind Freddie can see that house houses are going nowhere or maybe backwards where they live, unless they are living in a mining town or close to one.
Somewhere in the last few years we hit a nexus between the lowest mortgage interest rates on record, the maximum lending multiples on record, the laxest lending policies on record, the highest immigration, and the lowest unemployment we have seen for decades.
It was never going to get any better than it was in that period. And that combination is never likely to happen again in the next 30 years.
The glass is full for new home builders, but its a different type of full.
So RBA Governor Mr Glen Stevens was right when he told business people to get used to the new environment. You have to work with what you have. we should not expect the glory days to roll on for ever.
So yes I get that the glass looks "half empty" to those in the housing industry that saw the glass when it was brimming full. That brimming fullness cannot return anytime soon is all Mr Stevens was saying in my view. Turn your perspective to that the glass is half full, and you have to be the difference in making it fuller. Stop expecting Government handouts. Its been my experience that the biggest whiners about the welfare state, are the people that benefit most from the fact that we don't allow people to slip into abject poverty like some other Nations have of late, and yet these same whiners want the Government to bring the gravy train right by their front door.
What I would do if I were young?
If I were young and unattached, [now there's a glass that's half empty] I would be thinking of how I could Get a better paying job.
Well the slow route seems to be education, and the fast track is heading for a mining job.
You see in my day there was a perception that you die before you get old, and that you only ever went to school the once. If you missed the boat you were destined for something else.
Well this never was the case, and certainly does not apply today.
Most of the young may live past 90 years of age. And they can have many careers. So go get the training to get big money early, learn how to invest the surplus. Then if you have a fancy to, go get the formal education. Don't forget one thing. That all knowledge is transferrable. What you learn doing work can apply to your higher learning, especially if its in the same area of endeavour.
The exception to this is if you have a burning desire to do something. Then do that.
So I would be making that my wealth decision, not buying or building a home.
The other problem is that the stimulus concessions are revenue neutral for the NSW Government. In other words, the cost is the same to buy a home, its just that they have made it appear cheaper. Are home buyers that dumb? Maybe not.
The Sydney property boom may have peaked nearly a decade ago, but has it bottomed yet? Too many things say it hasn't.
- The Greeks are caught in the revolving door. Was it their fault that their Politicians lied, or that the Euro club wanted to believe those lies that got them cheap money?
- The Spanish property market is going even lower,
- The Chinese and Indian housing markets are going south, and
- The US has the lowest interest rates ever, people living in Tent cities, and buying a home is still on the nose even after property fell 40% in value.
Clearly the "101 monkeys" communication are operating here. And "monkey see, monkey do" is what is effecting our homebuyers, even if we have a different environment.
The real problem for new home buyers and why it can't be fixed easily
The real problem is that land prices in Australia are too high. They need to be half what they are to make building a new home make sense.
It can't be fixed because that price is mostly because Local and State Governments are addicted to the revenues they get from home sales and residential land development.
So besides developers paying too much for the land in the first place, big chunks of the cost of land development and building a new home are direct Government and council gouging.
And home buyers are beginning to realise it. Would you want part the mortgage on your home to pay for the future infrastructure of the State. I thought that that was State Governments expense, but no, its new home buyers that pay.
If we can fix that problem we will be OK.
Source:
Mr Mortgage
