The federal government is under pressure from its own ranks to more than double the first home owner's grant.
Queensland Liberal MP Steven Ciobo said the grant, introduced at the same time as the GST to boost home ownership, should be increased from $7,000 to $15,000.
Mr Ciobo, a member of a coalition group lobbying for tax reform, said the grant's eligibility criteria should also be tightened to ensure it does not go to wealthy people to buy multi million dollar homes.
While Mr Ciobo's concerns are admirable, and he has pinpointed the problem of housing affordability extremely well, providing ever higher government grants without caps on house prices in the market place is only going to fuel further inflation — real estate agents and developers are simply too oily to let an opportunity like that pass by without ratcheting up prices some more.
The real answer is in halting so-called 'market forces' by using price covenants, controlling the cost of land and construction, and finding other ways to cool down housing prices. Otherwise, not only will individuals continue suffering, but the entire economy is at risk of collapse from over-borrowing and over-indebtedness, largely drawn from overseas funds. Further, governments should distinguish between investors and owner-occupiers, and discourage spruiking and real estate investment drivel and hype in order to better house citizens affordably.
I would point out that PM John Howard in radio interviews has shown complete indifference to the problem, arguing that 'none of his constituents are complaining that their house values have gone up.'
Further, both Howard and Treasurer Peter Costello continue to allow 'negative gearing' tax deductions on investment properties and 'half-price' capital gains tax on sale of a property, which has lead to a continued speculative boom funded in part by the taxpayer. When state governments then levy land taxes on investment properties, they are lambasted by greedy real estate lobbyists and upset investors in the business of exploiting renters for all they are worth...
2 comments:
Hi,
I found this site from Patrick's link. It's great - I've been wondering if there were any Australia bubble blogs. I'll add a link from my place. I look forward to reading and learning about Australia!
Thanks Sean. Your blog is great.
Any kind of attempt to introduce subsidies and incentives to get more people into housing debt is a sham. The only way to increase affordability is to have property values correct (that is to reduce.)
Also don't believe the nonsense the government is telling you about inflation being at less than 3%. Why are cheap white goods from Asian countries taken into account to measure our CPI but not the price of housing? How about the cost of rental. Surely these are our biggest expenses. Hey, waiters were being paid $10 an hour ten years ago, and it is still the same today.... so whats the deal here??? Something is really F$&#ed up and Howard doesn't know about it?
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