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At the start of the month, the Federal Government released an additional 30,000 places in its First Home Loan Deposit Scheme. While some consumer groups have pointed to the risk of buyers bringing forward purchases they weren’t ready for, REIA president Adrian Kelly shared a different view.
“We’re not seeing that happening, simply because the banks are being much more cautious in their lending practices, particularly towards first home buyers and the lower end of the market,” he told MPA.
He said this attitude by the banks was a direct result of the Royal Commission, in which “the banks were put on notice to be much more careful.”
“In the current market, the banks and financial institutions really don’t want the regulator to step in so they’re changing some of their lending criteria by default,” he said. “In our mind, that’s certainly the responsible thing to be doing, particularly in those markets that are heated at the moment.”
While the scheme is likely to be helpful, it won’t be overly effective in addressing housing affordability since it does nothing to increase supply, Kelly said.
“We haven’t been building enough homes for the last couple of decades,” he said.
He also pointed to the purchase price thresholds for the scheme being too low for the current market, in which values surged at the fastest rate in a decade throughout the March quarter.
“Those thresholds are very, very low, both out in the region and in the cities,” he said. “It would be interesting to see what the number of take up is.
“The bigger problem for first home buyers is lack of available properties to purchase. Even if they can access the scheme, the ability for them to find something to buy is becoming increasingly limited.”
The REIA has been lobbying for the development of a national housing plan to address a longstanding supply issue – something Kelly said should be in place over the long term.
“It’s going to be important that we actually have some sort of plan that starts at a federal level and flows through to state and local government because, at the moment, there is no plan,” he said. “It’s unlikely that housing affordably will be addressed properly until we put a proper plan in place.”
He said he would like the plan to include such things as more effective local government planning, the rezoning of land for residential use and housing taxation reform.
Kate McIntyre is an online writer for Mortgage Professional Australia. She has a wealth of experience as a storyteller and journalist for a range of leading media outlets, particularly in real estate, property investing and finance. She loves uncovering the heart behind every story and aims to inspire others through the artful simplicity of well-written words.
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