HomeBuilder could push house prices down

Discussion in 'Property Market Economics' started by Peter2013, 4th Jun, 2020.

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Will HomeBuilder push down house prices?

  1. Yes, it will add more supply at a time when there is no demand

    13 vote(s)
    27.7%
  2. No

    34 vote(s)
    72.3%
  1. Peter2013

    Peter2013 Well-Known Member

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    HomeBuilder could push house prices down - AFR, 4/6/2020

    Economists are predicting the government's HomeBuilder program will push down the prices of existing homes at a time when landlords are set to sell vacant properties, after falling rents and increasing vacancy rates.

    The program is expected to add to supply but with boarders closed, and little immigration, this will only lead to more stock on the market.
     
  2. Poppy

    Poppy Well-Known Member

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    Right now in Sydney stock is at an extreme low.

    Of course we’re going to see the property market slump with borders closed and lower overall migration over the coming years, as migration has artificially propped up housing since Howard used it to gaffer tape over his economic mismanagement

    When it comes to this new scheme in Sydney I don’t see how it will dramatically affect well establish areas...the thresholds are too high (min $150k for a Reno and max $750k for a new build including land ?!)
     
  3. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    I don’t reckon it’ll push prices down. It’s only going to benefit those who were already considering building - so mainly FHB, realistically.

    People who look for established houses are usually looking in areas where building is far less of an option.
     
  4. Frosty123

    Frosty123 Well-Known Member

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    The 750k cap includes land?
    Does that mean if I were to do a knock-down rebuild in a middle suburb area of Melbourne, where the land is basically already worth 750k, I'm ruled out for a new build?
     
  5. shorty

    shorty Well-Known Member

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    Doubt it will do much . I'll be amazed if they get anywhere near $600 million.

    Those eligible on middle incomes are unlikely to suddenly splurge on big renos or build unless they were going to do it anyway.
     
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  6. gman65

    gman65 Well-Known Member

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    Economists are wrong the majority of the time. More certain than these predictions.
     
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  7. Joynz

    Joynz Well-Known Member

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    That’s exactly the group they are targeting - those going to build (who don’t need much financial incentive) and where planning is or was underway.
     
  8. shorty

    shorty Well-Known Member

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    Drunken sailor stuff, money spent but no stimulus.
     
  9. Joynz

    Joynz Well-Known Member

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    It will be a stimulus to the workers who’s source of income (builder) doesn’t go belly up.
     
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  10. Damo93

    Damo93 Well-Known Member

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    No. My understanding is the house + land must be valued below 750k.
     
  11. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Will it though, if those buyers were going to build anyways?
     
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  12. Damo93

    Damo93 Well-Known Member

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    Perhaps a few people. My work colleague and I have different projects that we put on hold for at least 12 months due to Covid-19. We are now awaiting the State Government to announce their economic stimulus to decide whether those plans will be fast-tracked or not.
     
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  13. albanga

    albanga Well-Known Member

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    So your saying they were going to build anyway? So really the government is giving them 25k for no reason...

    OK I’m being sarcastic. But let’s look at it like this. How many of the 27,000 estimated eligible were/are intact going to build anyway. How many were just waiting for some form of normal return.
    I don’t think it’s a stretch to say over half of them.

    So my comment isn’t far off the mark. The government really is handing out 350 million for zero reason <insert face palm>
     
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  14. shorty

    shorty Well-Known Member

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    Not no reason, I'm sure it has been crafted to appeal to the 'base'.
     
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  15. Peter2013

    Peter2013 Well-Known Member

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    I wouldn't say that. It will keep the Property Council of Australia, Housing Industry Association and the Urban Development Institute of Australia happy, which will help shore up donations to the liberal party. Surely that's classified as a win.
     
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  16. momentum26

    momentum26 Well-Known Member

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    More than likely the turnkey package sale price could rise by $25k if there is a big influx of first home buyers willing to put $1k down deposit. I am seeing multiple emails sent by new development which were lost for sometime, now they all have become active all of sudden. The last person to benefit out of this I think is the first home buyers in my view.

    So who bags the $25k HomeBuilder incentive?
     
  17. Waterboy

    Waterboy Well-Known Member

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    ^^^I don't think the government's aim is to keep house prices up.
     
  18. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

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    People who were thinking of building in 18 months time will be thinking about building now. It will really just bring forward some projects, which keeps more people in employed over the next 12 months. Probably a slight inflationary effect, but not much given it's a short term package.
     
  19. Fargo

    Fargo Well-Known Member

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    People wanting to build now already have to wait over 12 months, and this may make them have to wait longer and pay more. It will do the same thing as the 2008 stimulus and make it take longer to get a house built, unless you want to be the one who is willing to pay the most. Then builders increased their price 25% and worked 6 months and spent 6 months in asia, as it was more profitable than living and working in Australia for 12 months and being in the top tax rate. The may not be able to go to Asia now, but they may do less work to get the same income.
     
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  20. momentum26

    momentum26 Well-Known Member

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    So true!