HomeBuilder could push house prices down

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.

 

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 ?!)

 

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.

 

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?

 

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.

 

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

 

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.

 

Drunken sailor stuff, money spent but no stimulus.

 

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

 

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

 

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

 

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.

 

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>

 

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

 

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.

 

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?

 

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

 

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.

 

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.

 

So true!