As part of the “winding back” of the housing stimulus measures, Housing Minister Tanya Plibersek has announced there will be caps on the amount first home buyers can spend on their first pad while still being eligible for the $7,000 first home buyers grant (FHBG).
From the 31st of December, the FHBG will be scaled back to $7,000 and caps will be applied to the grant. In NSW, WA & NT this limit will be $750,000. Queensland will have a higher limit of $1 million, while Melbourne is capped at $600,000.
According to a spokesperson for the South Australian Treasurer, Kevin Foley, there are no plans to introduce a cap in South Australia.
The caps equate to 17x average wages for Qld, 12.6x for the NT, 11.9x for NSW, 10.6x for WA and only 9.8x for Victoria.
The FHBG was first introduced as compensation for when the GST (Goods and Services Tax) was introduced in 2000, some 9 and a bit years ago. Tanya Plibersek has been quoted saying “A strong housing market is critical for underpinning confidence and supporting jobs in the Australian economy”, yet little does she know that as housing cost continue to outpace household income, less money is available in the household budget after housing expenses to support the rest of the economy by purchasing goods and services. The grant is a failure as it does little to encourage new building, rather it only inflates existing asset prices and suffocates discretionary spending which underpins domestic jobs.
As any effects of the GST have well and truly passed, now should be the time for the government to consider abolishing the grant entirely. It is no longer needed.
I