If you’re a first home buyer, I’m sorry to have to say this, but this government housing announcement is not going to change the game significantly for you.
I can’t find a single economist who reckons this is a game changer. This is little more than tinkering at the edges.
If you are almost there as a buyer, it might help you a wee bit. It’ll lift the cap on the price of houses you can use a grant for. And it’ll knock a few investors out of competing for the house you want to buy.
But forcing them to pay a bit more tax on rental income and taxing them if they sell within ten years will only put some investors off. It’s not a huge disincentive, because quite frankly, houses are still - even with those changes – a good investment option compared to alternatives.
The best way to describe this is the way the government does, which is that it tilts the playing field towards first home buyers. It makes it slightly easier. But that’s about it.
What’s frustrating about this announcement is that it just doesn’t address the fundamental problems that are driving houses up in price.
We don’t have enough land. We don’t enough builders. Why isn’t there a big bold idea for housing to fix that?
Look, this is almost getting boring due to repetition, but our problem is a lack of supply. Has been for ages. Still is.
You can tax all you like, you can lift caps, you can give grants, but unless we have more houses, not a lot is going to change.
So where’s the big idea? Where’s the boldness – like Fran O’Sullivan said last night - why not bring in thousands of builders from China or Vietnam as she suggested and get cracking on pumping out houses?
Quite frankly, we are probably at the stage where house price inflation now warrants a grand idea like that.
Michael Joseph Savage had a grand idea in the 30s. He pumped out 33,000 state houses for people who didn’t have homes.
We’re probably due the 2021 equivalent of that. But be in doubt: what we saw today is not a grand plan.