42,000 take up first home offer

[Propertunity]

This just lends weight to my assertion that SYD will be where the next RE growth cycle begins. NSW has 1/3 of the take up of FHBG's which must, you'd assume, flow thru the rest of the property market here.

http://www.news.com.au/business/story/0,27753,25254924-31037,00.html

MORE than 42,000 people have taken up the federal government's first home buyers grant since extra money was poured into the scheme last October, new figures reveal.

Under the government's $1.5 billion first home buyers boost, the first home buyers grant was doubled from $7000 to $14,000.

Those first home buyers who purchase a new home receive an extra $7000 to take the total cost of government assistance to $21,000.

Australians have been taking up the boost at a rate of more than 12,500 a month, Housing Minister Tanya Plibersek says.

The boost combined with low interest rates has meant that thousands of first home buyers are entering the market.

"A strong housing market is critical for underpinning confidence and supporting jobs in the Australian economy," Ms Plibersek said.

NSW has seen the highest uptake, with 14,404 first home owners receiving the boost, followed by Queensland and Victoria (9319 and 8632 respectively).

About 4200 first home buyers have entered the market in Western Australia since October, more than 3300 from South Australia and 1135 from Tasmania.

Both territories recorded the lowest uptakes with 703 grants awarded in the nation's capital and 404 in the Northern Territory.

"First home owners, builders and developers have been telling me that the First Home Owners Boost is working. Some builders are also starting to see signs of more second and third home buyers," the housing minister said.

 

[keithj]

This just lends weight to my assertion that SYD will be where the next RE growth cycle begins. NSW has 1/3 of the take up of FHBG's which must, you'd assume, flow thru the rest of the property market here.

Doesn't NSW have 1/3rd of the population, so you'd expect around the same proportion of FHOGs to be taken up ?

 

[Propertunity]

Doesn't NSW have 1/3rd of the population, so you'd expect around the same proportion of FHOGs to be taken up ?

Now you're just confirming my bias with logic

 

[cloudyday]

Isn't this FHOG creating a further bubble? It seems a lot of young folks are rushing in, doing whatever they can to secure a mortgage, no matter how high it is because they're getting a few thousand dollars from the government. What happens when these folks later on fail on their repayments when interests rise and great numbers in society lose their jobs due to a weaken economy, weaken need for services, etc?

It seems we're creating the same bubble as what occured in the USA. Giving out loans to those who could hardly afford it in the start.

I've just come back from a family outing and quite a few of our relatives have already lost their jobs in the private and government sector. Each of them had 2-4 properties under their belt. They were able to manage their repayments on each house, but now that they're out of work, things will look grim. These were the same folks who had held on to secure jobs for decades.

 

[keithj]

Isn't this FHOG creating a further bubble?

See threads discussing this issue here and here

 

[WinstonWolfe]

Isn't this FHOG creating a further bubble?

It's an interesting question, and should include discussion of why one thinks Rudd thought FHBs needed a boost in the FHOG. The following from Pilbersek helps:

"A strong housing market is critical for underpinning confidence and supporting jobs in the Australian economy," Ms Plibersek said."

So, one could conclude it wasn't motivated 'primarily' to help FHBs, but to stimulate broader confidence.....

Some might argue there is no bubble in prices, but how about a bubble in borrowings against Australia's future debt serviceability? The additional grant is being borrowed from the future, and thereby needs to be paid for by future tax revenue. That means there's less revenue to spend on solar power research, nursing homes, child care, etc.

But let's not worry about all that as doing so won't help you get wealthy.

If you are a property investor, the FHOG increase helps you in several ways:

- it supports your equity
- if the recession deepens, then there will more distressed FHB firesales which you can use your equity to borrow against to buy.

So it seems the govt's primary motive is to support confidence. And that means they'll do all they can to stop property prices falling......something savvy Somersofters might exploit until it looks too fragile to continue.....but better to use the law of attraction and focus on the upside.