Property ownership and especially the family home has become an integral pillar of Australian’s personal wealth building and financial planning.
Consequently the issue of housing affordability is not just about housing. It has become a proxy for financial independence and generational wealth accumulation. Housing has many social ramifications and home ownership enabling financial independence is an important national issues that will impact Australia’s social and financial prosperity for many generations.
To address this challenge there are a number of state and federal government initiatives to help people buy a home.
These include:
- First home buyer stamp duty concessions
- Homebuyer Fund
- First home buyer grants
- First Home Super Saver Scheme
From my observation most of these initiatives successfully provide a leg up for the target cohorts, but enabling them to pay more actually benefits the sellers as it creates more competition at a higher price which pushes prices up making the hurdle even higher for people struggling to buy a home. This is pretty much the opposite of what we need to do.
A recent AFR article by Joanna Mather highlights this issue when discussing the scheme proposed by some Liberal MPs to allow first home buyers to divert up to $60,000 from their superannuation into the home. The article quotes modelling by The McKell Institute and University of SA which shows enabling access to the full $60,000 would add $108,000 to Melbourne’s average home price and $69,000 in Sydney and $159,000 in Adelaide.
