Will Govt’s FHB Solution Help At All? No.
This year’s election has clearly worn thin on many people, with a huge turnout of postal votes already having been delivered to the AEC ahead of this Saturday’s election.
That’s almost 16% of all eligible voters across Australia getting their votes in early, which casts doubt on whether the AEC will be able to deliver a result of the election this Saturday night (given postal and pre poll votes are counted only once the vote arrives to the electorate in the mail afterwards).
Enough about voting, how about real estate?
After the News Poll release showed Labor still holds a small two-party preferred lead over Liberals, Scott Morrison announced a last-minute pitch to provide a $500m fund to underwrite deposits for homes by FHB’s, providing a 20% deposit.
Sadly, ScoMo’s plan to provide $500m will represent just 0.27% of the $1.8 trillion dollar real estate market, hardly enough to make a dent in issues around affordability and falling prices.
This fund is seen widely as a response to Bill Shorten’s pitch to the disenfranchised, who see negative gearing as the real problem behind housing affordability. However Shorten quickly responded to the news by promising to match ScoMo’s promise. Not just match, but copy the solution.
A 20% Deposit Is Unrealistic – And Doesn’t Solve the Core Problems
According to data obtained by accounting firm BDO, the average deposit on a home purchase was 4% over the March 2019 quarter in South Australia, indicating that smaller deposits are still being accepted by banks and lending institutions – and not a major concern to the industry.
There are a host of other issues which the government should carefully consider addressing, such as shortages of credit availability (banks unwilling to lend, rejecting applications over purchases like Uber and Netflix accounts), the RBA’s recent potentially politically driven decision to hold rates at 1.5% despite a largely expected cut, and the widely used “Bank of Mum & Dad” which recently hit $20 billion in unsecured loans.