so home prices are going to plummet, page-72

tend to agree with this bloke...


RP Data's Michael McNamara said property prices are likely to climb by the same amount as the new grant and that the $1.5 billion promised for those buying their first home would be better spent on improving residential infrastructure.

Under Prime Minister Kevin Rudd's economic rescue package — an attempt to shield Australians from the global financial crisis — first-home buyers purchasing existing homes will have their grant doubled from $7000 to $14,000.

First-home buyers purchasing a newly built home will be eligible for a $21,000 bonus, up from $14,000.

The grants are available between now and June 2009.

"By introducing the grant, properties are going to become no more affordable because it will increase demand and drive up prices," Mr McNamara told ninemsn.

He said that when the $7000 first-home buyer grant began in 2000, house prices across all capital cities in Australia rose by $32,000 on average that year. "Almost immediately every single cent of that grant was sucked up in more expensive house prices."

Mr McNamara said the federal government could do better to lift home buyer interest in middle or outer suburbs by improving public transport services or offering grants to employers that relocate from inner cities.

"There are oodles of cheap properties in and around our cities — all we have to do is make it attractive for young people to buy them and live there," he said.

He also said the rescue package, rather than boosting the first-home buyer grant by $7000, could instead help reduce the "dog's breakfast" of property taxes that affect housing prices, including stamp duty, land tax and infrastructure levies.

Treasurer Wayne Swan this morning said the grant was "a temporary measure" to stimulate a housing market he described as "pretty flat around the country".

Mr Swan told Fairfax Radio Network this morning that the dramatic cut in official interest rates announced last week by the Reserve Bank "would take some time to feed through the system".