Monday, 2 May 2022

Homes for 10,000 families?

This is the latest election "promise" being made by the current Opposition.  It is perhaps one of the worst yet. 

I went to look at their website. Yes, the policy is there but read on. It is for regional Downunder only.

That might not seem like a bad thing but is that where housing is most needed? And what do they mean by "regional"? I am sure they would find a way of avoiding a small country town without too many growth prospects.

There are upper limits on the price of the housing too. Fair enough as this is supposed to be for people who would otherwise not be able to obtain a house at all. The problem is that housing of a reasonable standard may not be available for that price. The would be buyer has to have at least 5% of the purchase price saved and the government would apparently put in "up to 15%". Note those words "up to". How many buyers would be eligible for that? Not too many I suspect. These buyers still have to be able to get a bank loan and many of them would not qualify. Will banks really want to take the risk even with a greater deposit? I doubt it. The idea that some buyers will save up to $32,000 in mortgage insurance is simply nonsense. On the website it actually states that, for this state, the "saving" is likely to be only around $10,400.  Mortgage insurance will simply rise - for everyone. 

When all the restrictions on the scheme are taken into account there are very few people who will actually qualify. (Remember, they still have to be able to access a bank loan.) They may well find that they are required to pay a higher rate of interest because they are people the bank might have previously turned down because they have not shown evidence of having the necessary deposit.

And then there is what happens when someone needs to move on. Our workforce is much more mobile than it used to be. Selling the house may or may not be a problem. If it is sold though what happens next? These people will not be eligible for another "first home" grant somewhere else. The government will want their money back - rightly so. But there was something not on the website and that is that the scheme would also demand a hefty share of any of the profit. That could well leave someone many thousands of dollars worse off. 

I queried this from someone very senior who should know about such things. His response was, "We are still working out the details." Really? 

This is a scheme which they spruiked as being costed at $375m - but the fine print on the page says it would not start until January 2023 and that "to the end of 2024-25" would cost $12.1m. 

I suppose there are cheap tents.

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