NSW to buy up spare homes

Interesting development today on the front page.

When the GFC hit the USA, banks over there took bulldozers to empty homes in a bid to put a floor under the market and prevent further falls.

The Berejiklian Government intends to buy them all.....

I wonder if Victoria will be forced to do the same?

 

With the current median house price $500 million is not a lot of buying of houses.

 

This is what I thought when I was reading. It might temporary help to turn the sentiment..

 

They're not buying median-priced houses. 3 projects are for about 1000 odd new dwellings for social housing, as well as buying some existing developer stock (prop up a few developers, suck up any oversupply & create the impression of a shortage in the pipeline to spur on new construction & jobs).

 

With a median house price close to $1m, it hardly seems necessary

 

Which bit @Buynow? Provision of social housing or govt incentives to spur on industry or govt buying up existing stock at cheap prices taking advantage of the drop in the market?

 

The Buying of existing apartments. I think auplort of new construction is a positive

 

If they want to stimulate new construction across the land, Labor proposed a revised version of NRAS ( they didnt give it a name, so lets call it NRAS 2.0 ) which would deliver up to 250,000 new dwellings over the next 10 years . The proposal included a 15 year tax free incentive of @ 8.5K per annum for investors/affordable housing providers/consortiums.

This is a far more efficient use of taxpayer money that purchasing resi housing assets outright. It would equate to $127,500 per dwelling spent on investor tax credits over 15 years, with costs of purchase and ownership borne by the investor . Buying assets outright would cost more the Government far more than $127,500... and the cost would not be spread over 15 years, and it would also require ongoing administrative and maintenance costs to be borne by the Government - imagine the size of the bureaucracy required to administer all that housing !!!

This sort of thing would create significant new construction work. It would provide significantly more affordable rental accommodation . It would offer investors a superior net return. All win win's.... Alas, because it was a Labor idea they probably won't even consider it.... even though the policy is pure Liberal /conservative in its origin - after all, it was stolen/copied from a Republican/Regan era policy called the Low Income Housing Tax Credit, which funnily enough even Trump and his son in law Kushner LOVE and are heavily invested in. There is no ideological argument available to the conservatives/right wingers to not pursue this... other than the fact it was a Labor idea to introduce it at all... well actually that's not entirely true. Howard wanted to do it...then lost the election and Rudd pushed it through.... so it was actually a Liberal idea hijacked by Labor.... but still, I doubt they'd resurrect it . It would mean admitting Labor had a good policy This is why you'll see States looking to do things on their own - but they cant really be effective without Federal tax involvement. As much as the states control some things, they dont control revenue and taxes.

 

see attached

 

$500m is tiny though...its like one building in the CBD. That won't even make a dent on the market as a whole.

Also if the goal is to provide a boost to construction in this post recovery phase, from a policy design perspective, it may be more prudent to design policy that delivers outcomes far quicker than 10 year plans. I.e. it'd be more appropriate to get money & activity flowing now, rather than in latter years.

 

The Abbot COA in 2014 found a lot of implementational issues with the program. Middle men horse trading incentives, developers over-charging, gauging, administrative issues etc. With a policy of this size, thats only to be expected and the bigger picture of delivering outcomes may have been brushed over given the politics of the time ('debt & deficit', 'budget emergency').

It would be hard to walk back to that old policy, without a significant re-brand and change to broad policy design I think. I.e. it may be politics that makes this hard to do, not policy.

In terms of the actual policy, it does shift the burden onto the private sector, and incentivises them to get it done, which is in line with this governments policy thinking.

 

Operative word: current

Maybe the Govt can get them at a 30% discount?