The effect of First Home Owner's Subsidy



From: Seagull .

I am relatively new to this forum and this topic may have been discussed previously. If so, could you please bear with me raising it again. I am concerned that the Gov't's subsidies may be making it easier for 'good' tenants to purchase homes thus taking these people out of the rental market, and what we will be left with are the not so good tenants.... any thoughts?
I feel a bit guilty raising this issue because there is an ethical issue for me: ideally I would like every young couple to own a home, but on the other hand I need good tenants to occupy my IPs. It's a bit like the medical profession: doctors only get paid when people are sick.
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Reply: 1
From: Terry Avery

Hi Seagull,

I can understand your desire for every young couple to own a home but the
problem is that young people may not see it the same way. They have more
information available to them on the investment options available to them
and so a number of them are choosing to continue renting. The trend over
some time has been an increase in the number of renters so I wouldn't worry
about an ethical issue like the one you pose.

Also remember that the government subsidies are not there to help young
people it is to appease the housing industry lobby groups. Of course such
populist policies won't hurt their chances of re-election either. Also the
subsidies have an expiry date so only small numbers will be able to avail
themselves of the grant.

I would suggest follow the market and make your judgements accordingly. The
grants may cause a small drop in the pool of renters but I don't expect it
to be significant in the long run. There are still a number of young ones
living at home who will eventually move out and rent (my son is one of them
but he is saving for his first IP).

Don't feel too guilty, market forces will always determine supply and
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