The Victorian Government has axed stamp duty for first-home buyers on homes under $600,000 to help fight the housing affordability crisis, but will it have the opposite effect and push prices higher?
For houses worth a little more, between $600,000 and $750,000, stamp duty will be discounted and the measures are expected to benefit around 25,000 first-home buyers by saving them about $8,000 a year.
Saul Eslake is one economist who thinks the measures will cause prices to spike.
“History shows that anything which allows buyers to pay more for a property than they otherwise would – as this proposal does – results, primarily, in people paying more for properties than they otherwise would,” he told Australian Broker.
“Assuming that there are other prospective buyers of this property, competition among them is likely to push the price up to the $500K this would-be first time buyer is now willing and able to pay.”
Despite receiving support from some, Mr Eslake says he’d like to see the back or concessions and exemptions that allow first-home buyers to buy more expensive homes than they otherwise would.
Mr Eslake things governments should instead focus on four main points to help first-home buyers get into the market.
Those four points are to curtail negative gearing and reduce the concessional rate of CGT, reduce planning and building red tape to speed up the process, free up more Government-owned land and invest more in public transport and arterial roads to improve housing estate accessibility.