The fallout from Victoria’s first home buyers strategy
The Victorian state government's announcement that from 1 July first home buyers in Victoria will not have to pay stamp duty has brought about various opinions from experts on what the fallout from such a decision will be.
Fuelled by the housing shortage right across Australia and around Victoria, and an ever increasing demand from first time property buyers, the prices are set to stay strong and continue to edge forward. While the sentiment of waving the state charge comes from the right place and aims to support virgin buyers, some believe the ‘home free’ on the stamp duty may well drive prices up and even more out of reach for those starting out.
It is hard enough for first home buyers to get into the market, relieving the extra pressure of having to save up for stamp duty is certainly going to motivate more buyers.
Some experts believe this will drive prices up, rather than down, but really, it will encourage younger buyers to purchase sooner.
Additionally, the Victorian state government has announced to give first home buyers even greater incentive with a first home buyers grant of up to $20,000 (provincially) and $10,000 in metropolitan areas.
Price will never curb housing shortage, nor will affordability. As long as we have a shortage of land and steady demand, nothing will really change. But, with offerings that will save first time owners upward of $30,000, we will see more people taking the leap to property ownership sooner.
Property has been at the centre of the Great Australian Dream, mind you with median prices across Melbourne being what they are, for many young people it is either a pipe dream or a nightmare.
Not surprising, the rentvestor trend is on the rise as younger people cannot afford to buy where they want to live.
While, the move by the Victorian state government to abolish the stamp duty charge gets the thumbs up from first home buyers, whether this will drive prices up or not needs to be seen.
For many, come the new financial year, it may mean actually getting into their first home due to these changes, however the risk lies in that people may borrow more than is sustainable or what they can afford to hold should interest rates start to climb.
I think it’s a good initiative and one that incentivises people to get into a property sooner, with time in the market being the key here, as long as one buys well.
Speculation that other states will have to follow suit or that we will see a backlash of price increases because of this move by the Victorian state, will only be answered by time.
Marion Mays, director, Thalia Stanley Group