Recently the Victorian Government announced Homes for Victorians an initiative to make housing more affordable.
However, I found every time governments tinker with the property market or affordability they tend to push up property values – the exact opposite the result that they desire.
In this video update, Danni Addison Victorian CEO of UDIA talks about the broader economic impacts we can expect to play out in the Melbourne housing market over the next 3-5 years.
Amongst other things she warns that discouraging investors not a good move for housing affordability.
This is what the government plans:
Clearly fixing the affordability problem isn’t simple.
The government saysHomes for Victorians provides a co-ordinated approach across government, and across our state and includes:
- abolishing stamp duty for first time buyers on homes up to $600,000 and cuts to stamp duty on homes valued up to $750,000
- doubling the First Home Owner Grant to $20,000 in Regional Victoria to make it easier for people to build and stay in their community
- creating the opportunity for first home buyers to co-purchase their home with the Victorian Government
- making long-term leases a reality
- building and redeveloping more social housing – supporting vulnerable Victorians while creating thousands of extra jobs in the construction industry.
The UDIA’s thoughts on this:
In the video Ms Addison explains that there are three major unintended consequences of the Homes for Victorians strategy, each associated with skewing the supply/demand balance and therefore negatively impacting upon housing affordability.
- Impact on house prices:
The demand for houses in Melbourne’s growth areas and established suburbs will increase but supply will not, which will drive up house prices rather than making them more affordable.
- Impact on rental affordability:
A decline in investors purchasing and leasing out new housing will limit rental supply and push up prices for renters.
- Impact on new housing supply:
Removing stamp duty concessions for investors purchasing off-the-plan properties will decrease the supply of new housing, pushing up costs for home buyers.
What are your thoughts?
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