Victorian first home owners grant to be cut

The Victorian state government has announced that it will be scrapping the $7,000 first home owners grant for existing houses. To counter this they will increase the grant for new contructions to $10,000 (up from $7,000). They will also bring forward the next round of stamp duty cuts for first home buyers from next January to the coming July.

From The Age

http://theage.domain.com.au/state-scraps-7000-grant-for-existing-homes-20130429-2ingy.html

I expect we'll see a glut of first home buyers over the next few months, especially in the outter suburban areas which tend to be at a better price point for first home buyers in Victoria. This will probably be followed by a trend towards new properties from July.

I'd say that as a result there will be a moderate spike in prices for outter preperties followed by a decline. I imagine that developers won't be too upset today, but they'll find a lot of people will put of their purchasing decision (willingness to sign) for another 2 months.
 
the stamp duty concessions have been based on settlement dates, and the FHOG on contract dates previously.

I wonder if that means FHB at the moment can get a long settlement, settle after July and get the stamp duty concession, and the FHOG.....
 
I thought this was a great initiative when I caught it on the news last night.

However upon reading the details this morning now think it is a hollow offer.

Benefits are primarily there for first home buyers who build, which limits them to the outer suburbs.

The further reduction in stamp duty helps existing home buyers, but it really is giving with one hand and taking back with the other.

Who would've thunk that the Government would do that heh...?
 
I generally find the biggest hinderance for first home buyers isn't affordabilitly, but it's coming up with enough funds for a basic deposit and purchase costs. I see it all the time that peoples affordability is well in excess of what they're savings will allow.

Reducing the stamp duty early helps, and whilst the grant is only $7,000 and a lot of people don't truely need it; the grant is really helping the people at the lowerest end of the market buy their first home. If they want it enough, those on higher incomes will find a way regardless of this presence of absence of assistance.

All this does is push people towards the developers, which in turn pushes up prices in the satelite suburbs. These prices have already proven to be unsustainable. When you read the stories of mortgage stress, these are the area's they're talking about. Predominatly blue collar, high LVR to the point of negative equity. Add to this a baby or two with Mum off work, or a redundancy, and you've got a recipie for disaster.
 
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I agree with you Peter. This will have no effect apart from forcing people to buy in the fringe areas for new stock. For those in the established areas, the $7k is pretty inconsequential.
 
Offering the grant on new homes only is a smart move - its about boosting supply - there is nothing wrong with the 'fringe areas' its a perception espoused by people who want to protect their own interest in maintaining high prices if existing stock. Most of those areas despite popular opinion are well serviced by new freeway and rail extensions, shopping centres and schools etc - unless people work in the CBD there is really no reason to live close to it.
 
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Offering the grant on new homes only is a smart move - its about boosting supply - there is nothing wrong with the 'fringe areas' its a perception espoused by people who want to protect their own interest in maintaining high prices if existing stock. Most of those areas despite popular opinion are well serviced by new freeway and rail extensions, shopping centres and schools etc - unless people work in the CBD there is really no reason to live close to it.

Studies have consistently shown that the fringe areas are the localities with higher obesity etc as the only restaurants that service these areas are fast food. Having said that, I do concede that it is difficult to get the balance right as there is always a vested interest with landlords in existing areas.
 
Offering the grant on new homes only is a smart move - its about boosting supply - there is nothing wrong with the 'fringe areas' its a perception espoused by people who want to protect their own interest in maintaining high prices if existing stock. Most of those areas despite popular opinion are well serviced by new freeway and rail extensions, shopping centres and schools etc - unless people work in the CBD there is really no reason to live close to it.

I disagree. I grew up in the outer suburbs of Melbourne myself and it's definitely more than just perception. Infrastructure is far more common and of better quality in suburbs closer to the city as is overall quality of life. I wouldn't be surprised if this move was due to lobbying by the big developers. They are trying to bribe FHB with free cars, shopping vouchers, furniture, etc so why not add the grant in there as well. These suburbs are unsustainable in the long-term and I think people are (very slowly) figuring this out.
 
I disagree. I grew up in the outer suburbs of Melbourne myself and it's definitely more than just perception. Infrastructure is far more common and of better quality in suburbs closer to the city as is overall quality of life. I wouldn't be surprised if this move was due to lobbying by the big developers. They are trying to bribe FHB with free cars, shopping vouchers, furniture, etc so why not add the grant in there as well. These suburbs are unsustainable in the long-term and I think people are (very slowly) figuring this out.

Quality of life??? So you're deciding for EVERYBODY that living closer to the city is better? Those poor people who live on 1-2 acre lots in Templestowe and those that live beach side in Mornington....how DO THEY cope??? :rolleyes:

All I see is more and more money spent in these outer suburbs - more shopping centres, more cafes/restaurants, improving infrastucture. Are they perfect? No. But neither is the inner city. Catch a tram from Kew to the city and there goes 50 mins. A train from Narre Warren to the city does it in less.

As tambourineman stated above there's no need to be close to the city if you aren't working there.

Oscar
 
Offering the grant on new homes only is a smart move - its about boosting supply - there is nothing wrong with the 'fringe areas' its a perception espoused by people who want to protect their own interest in maintaining high prices if existing stock. Most of those areas despite popular opinion are well serviced by new freeway and rail extensions, shopping centres and schools etc - unless people work in the CBD there is really no reason to live close to it.

The CBD of Melbourne has a moving population of 2 million people, so there's a 50% chance you'll need to access it on a daily basis.
 
As tambourineman stated above there's no need to be close to the city if you aren't working there.

Oscar

Unless you work in a very small number of industries or have your own businesss, chances are you will need to commute to the city or least close to it if you leave in outer suburbs. I don't know anyone who commutes far distances who doesn't complain about it regularly. Even a big plot of land doesn't make a difference in most cases when you're doing the commute daily. Studies have shown that mentally, people working ten hour shifts with a negligible commute do better than those who work eight hours but commute an hour each way. Obviously if you don't work there then it's less important but the number who work locally are pretty small. Have a look at any train leaving Sydenham/Werribee/Dandenong/etc, for example, between 7am - 9am on a weekday if you need further convincing.
 
The CBD of Melbourne has a moving population of 2 million people, so there's a 50% chance you'll need to access it on a daily basis.

Rubbish.

I lived in Adelaide for six years and apart from when I was at uni I reckon we might have gone into the city a few times at the most - there is nothing there that wasn't at several major centres outside of it. I loved in Perth for a similar period of time and (granted its a nicer city in my view anyway) we didn't go to the city all that often an I loved closer to it there.
 
Sorry I was talking about cities, like Sydney and Melbourne.

I've been to Adelaide and Perth many times for work trips. Hardly consider that a city. Probably more a town.
 
I wonder how many people who reside in Sydney actually spend time in the CBD frequently and of those how many do it for reasons other than work
 
Perhaps we can reduce some wondering and speculation with easily found statistics/surveys.

On an average day, around 805,000 people use the city...The entire Melbourne metropolitan area has a population of around 4.1 million. (2012/2013?)
So about 20% of population use the cbd on an average day.

Weekday daytime population 788,000. Workers 384,000(2010/2011)
  • The number of daily population to Melbourne municipality is set to grow at 2.1 per cent annually in the next two decades reaching a million mark in the next ten years.
  • The total estimated number of users of the central city area aged 15 years or over is 599,000
    on a weekday and 510,000 on a weekend.
  • City workers or people undertaking work related activities account for 58% of the weekday
    users (293,000 - including 242,000 whose regular place of work is in the central city area)
  • Students account for 10% (48,000) on weekdays
  • Users from all
    parts of metropolitan Melbourne or Victoria for non-work or studying purposes are estimated at
    164,000 on weekdays (32%)
  • Just over a quarter (27%) of the residents from the metropolitan Melbourne area (excluding the
    City of Melbourne) travel to the central city area at least once a week. This includes 4% who
    come to the central city area daily or almost daily.
The last one is probably the most interesting.

Now for my own speculation :) If we consider an "average" family of 4 living outside of the city of melbourne area, it's highly likely that at least one person in the household will want/need to visit the city at least once a week. If we consider 6 of these average families, one of these 24 people will need to visit the cbd daily or almost daily.

We can take a guess from these stats the vast majortiy of this 4% (~160,000) are visiting the cbd for work. (242,000 regularly work in cbd, city of melb population 100,000 not all of which will work in the cbd).

If we look at the wider city of melbourne area (which will take into account workers in docklands, st kilda rd etc.), we have 384,000 workers. If we derive from the previous stats that ~66% (160,000/242,000) of workers are from outside the city of melbourne area, then we get ~253,000 or over 6% of the outer population.

Commuting flows in melbourne (based on 2006 stats)(2011)(~p. 209)
  • Between 7-22% probability outer suburb residents travel to work in inner suburbs.
  • The Inner subsector had 343 359 (i.e. 443 850 less 147 053) more jobs than employed residents, resulting in 77 per cent of its workforce commuting to the Inner sector from other subsectors.
  • 45 per cent travelled between 10 and 30 kilometres (of which 31 per cent travel between
    10 and 20 kilometres) (to their place of work)
  • 10-30% in Outer suburbs travel over 30km to work VS less than 5% in inner and middle suburbs (derived from graph).
  • Average commute time to work from city 29min, average commute time to work in city 48min

Distribution of jobs in melbourne(2011)
  • 15% of jobs in CBD (~2km radius)
  • 28% of jobs within 5km radius
  • 50% of jobs within 13km radius

I'd say the chance you need to access the city on a daily basis is less than 50%, however 50% of jobs within 13km still suggests strongly that living near the city (within 13km) substantially increases the probability that you live near where you work.

Anyway, I seem to be good at following threads off topic.

I think it's pretty reasonable, if they want to increase supply then it makes sense, $10,000 is a good lure for a FHB, i think it will increase the number who buy new instead of existing. I think it will help move some of the inner city apartments quicker, it reduces the gap between a fancy new 1-2br and one that's 10 years old.
 
Pete's pretty bang on with his predictions. SA has done a similar setup recently with removing FHBG and putting in place a Builders grant, which has resulted in a large number of FHBers rushing off to build on tiny plots in the middle of nowhere for silly prices. Meanwhile fully established properties selling for less than H&L in the same area are having difficulty selling.

The market is becoming quite unbalanced. Subdivision developments are becoming more profitable as well, as you can claim the builders grant x2, effectively 17k towards your build.

Get rid of all this grant business I say and stamp duty while they're at it. FHB'ers have to sit there are save a substantial deposit, only to have their effective deposit be eroded away by government charges and LMI.
 
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