Victoria first-homebuyers double after housing affordability reforms

Treasury figures show changes to stamp duty and first-homeowners grants did not raise property prices as feared

 An increase in first-homebuyers often follows in the immediate months following an abolishment or reduction of stamp-duty, according to the Grattan Institute. Photograph: David Crosling/AAP

An increase in first-homebuyers often follows in the immediate months following an abolishment or reduction of stamp-duty, according to the Grattan Institute. Photograph: David Crosling/AAP

Free Download: First Home Buyers Checklist

Click here to subscribe

Housing affordability reforms introduced by the Victorian government in July have seen a doubling in the number of first-homebuyers compared with the same period last year.

Figures from the office of the Victorian treasurer, Tim Pallas, show that between when the reforms took effect from 1 July, and 12 October, 4,335 first-homebuyers entered the market. In the identical period in 2016, there were 2,033 first-homebuyers.

The key reforms included abolishing stamp duty for first-homebuyers of properties valued up to $600,000, and reducing stamp duty on homes valued between $600,000 and $750,000. The first-homebuyers grant was also doubled to $20,000 for those willing to buy their first home in regional Victoria.

The number of first-homebuyers in regional areas has increased almost fivefold, the data obtained by Guardian Australia shows. There were 319 first-homebuyers in regional Victorian between 1 July and 12 October compared with 66 in the same period last year. Greater Geelong and Greater Bendigo were the most favoured regions.

Data from the state revenue office shows there hasn’t been a coinciding increase in property prices as some analysts feared.

Pallas told Guardian Australia that the government was now in discussions about how to introduce requirements on developers to include a minimum amount of inclusionary zoning for affordable housing as part of all-new developments. The state currently offers surplus government land for sale to developers at a discounted price so long as a proportion of it is allocated to social housing.

“We don’t want to jump into inclusionary zoning requirements in a way that frightens new development out of the market,” Pallas said. “We need to walk before we run on this stuff.

“But if we make this a requirement, and it would effectively be a tax on developers by the state, we’d need to offer developers a value proposition in return. So that could be things like saying ‘If you do certain things in terms of greater access to first homeowners, we can look at what we can do for you in terms of intensification of development and guaranteed infrastructure in communities to increase the saleability of new developments’.”

The reforms to stamp duty and first-homeowners grants were followed by measures aimed at making the rental market more affordable and stable, and from 1 July investors were no longer eligible for the stamp duty concessions for new property.

“Helping people move into affordable and secure housing was our priority and we have done it in a way that has comparatively disadvantaged investment,” Pallas said. “We are not against investment, but if we have to make a choice between getting people into homes or getting people into their third, fourth or fifth investment property, it’s getting people into their first homes.”

Pallas called on the federal government to do more to assist first-homebuyers, saying he was “positively jealous” of the levers the government had at its disposal including making changes to negative gearing and capital gains tax.

However the chief executive of the Grattan Institute, John Daley, said historical data showed there was always an increase in first-homebuyers in the early months following an abolishment or reduction of stamp-duty. Longer term, the data showed that the property market did become more expensive as a result of stamp-duty concessions, he said.

“Now that effect usually takes a little while to come through, so in the short run first-homebuyers quick off the mark will buy a bit more cheaply, but as first-homebuyers get used to it prices go up, so then you get the same amount of first-homebuyers as always but with higher property prices,” he said.

Examining ways to make inclusionary housing mandatory as part of new developments was a positive step by the government, he said.

“It won’t increase housing stock, but it will lead to more neighbourhoods with people from different backgrounds,” he said. “At the moment developers tend to build units all the same and you get people of similar circumstances moving into them, so you wind up with homogenous neighbourhoods.

“Increasing diversity is one of the most important reasons for having inclusionary housing.”

Professor Billie Giles-Corti, an RMIT urban planning expert, said the Victorian government should be praised for trying to address difficulties for first-homebuyers.

“I find it a bit rough when commentators only pick up on the negatives of these government policies,” she said.

“I congratulate the Victorian government for doing this and we need all of these reforms in attempts to address the issue. But we must encourage comprehensive long-term evaluation of these policies and address any unintended consequences as they arise.”

Any Questions?  Ask Darryl Here

Free Download: First Home Buyers Checklist

Click here to subscribe

Source: The Guardian