The Reserve Bank (RBA) has left interest rates on hold as expected, piling more pressure on the New South Wales (NSW) government to take the lead out of its Victorian counterpart and introduce strategic measures to support first home buyers.
Laing+Simmons managing director Leanne Pilkington said interest rates were at their lowest point in the cycle particularly from the bank’s’ standpoint and believes the time was right to help people get into the housing market now.
She believes it starts with the state government getting rid of stamp duty.
“The NSW Government has missed its chance to take a national leadership position in improving affordability for first home buyers with the Victorian Government’s unveiling of the Homes Vic plan. But it’s not too late,” Pilkington said.
“The opportunity remains to do more and the steady rate environment that is expected to prevail this year is the ideal time to act.
“Stamp duty concessions are essential at the lower end of the market to avoid the deposits of first home buyers being eaten up by such a pointless tax.
“However, reform for those looking to downsize will also be important to free up established homes and give growing families greater options to upgrade.
“The natural spike in housing turnover that stamp duty reform would generate will obviously have significant benefits from an economic perspective, but more importantly it would finally provide choice and hope for those younger people serious about buying a first home.
“The Government has acknowledged that new supply is an essential component in improving the affordability equation. It is, but it’s important to remember that new supply means more than just new development. Freeing up established housing and making better use of available residential land is critical,” she added.
Another potential solution to support first home buyers – without adding further upward pressure to prices – is the introduction of a Government-backed savings scheme to help young people accumulate a deposit.
As for the NSW Government taking an equity position in the first homes of eligible buyers, as Victoria’s Homes Vic plan allows, Pilkington believes it was an idea with merit.
“The industry perspective has always been that there’s no single fix to affordability and that only through a coordinated approach will a genuine improvement be achieved,” Pilkington said.
“The RBA is doing its job. The banks are fronting a parliamentary inquiry that will ideally ensure they take their obligations to their customers more seriously in the future.
“It’s time for the NSW Government to play its role (in helping first home buyers get into the market).”
