AUSTRALIA'S peak real estate agency body has labeled a HIA proposal as a blatant grab for taxpayer's money which will likely force up house and land packages.
In addition, the Real Estate Institute of Australia said the HIA’s opportunistic proposal to direct even more funding to new housing will create inflationary pressures on the building sector.
The HIA is proposing that the First Home Owner’s Grant Boost be increased from the current $21,000 to $30,000 for the purchase of a new home and decreased from $14,000 to $7,000 for existing homes.
“To suggest that there is little economic stimulus from spending on existing homes is a fallacy,” REIA president David Airey said.
“To make the matter worse, it ignores first home buyer preferences for existing housing,” he added.
Airey said the economic stimulus affect of first home buyers purchasing existing homes has been underestimated and urged the Government to look at the data which is just starting to show that sales of established housing to first home buyers leads to further sales of either existing or new homes providing further stimulus to the economy.
Furthermore, Airey said not all first home buyers want to purchase house and land packages in development in new housing estates.
For example, he pointed out in Queensland the ratio of existing purchase by first home owners favours existing dwellings over new by 9:1.
“This is also evident in Western Australia where there have been large scale new developments in response to the mining boom, the ratio of purchases of existing to new housing is running at 3:1,” he added.
Airey said information from builders, state housing departments and the Defense Housing Authority suggests that building activity will pick up markedly in late 2009/2010 which will test supply constraints and may create inflationary pressure.
“The proposal to increase the FHOG markedly for new housing at the expense of existing housing will fool no one,” he concluded.
Australian Property Journal
