27 Mar Is this the answer to housing affordability? – Nerida Conisbee
We take a look at the Victoria Government’s housing affordability package called Homes for Victorians. Is this the answer to making housing more affordable and will other states harness this initiative? Nerida Conisbee from RealEstate.com.au gives us her thoughts.
Kevin: Of course, one of the most popular topics when it comes to property is all about affordability. Interesting to see that in Victoria, the state government there have instigated a policy they’re calling Homes for Victorians, the government’s Housing Affordability package. To have a look at this and just unwrap it a little bit – pardon the pun there – Nerida Conisbee, who is the Chief Economist with the REA Group, joins me.
Nerida, how are you?
Nerida: I’m well. Thanks for having me.
Kevin: It’s a pleasure, as always. Tell me a little bit about this initiative. What are they doing?
Nerida: They’re looking across a range of measures, so there are cuts to stamp duty for first-home buyers, there are taxes on vacant properties, and there’s also a kind of rent-to-buy scheme or a scheme where the government owns a proportion of the property that will allow people on lower incomes to get into the market.
Kevin: What’s the early feedback on this, Nerida? Do you think it’s going to make much of a difference?
Nerida: I think it’s great news. I think the Victorian government is certainly on the front foot in addressing affordability. When we look at affordability nationally, it’s not really a huge problem in Melbourne. I know people in Melbourne think it’s very expensive, but when we compare to what’s happening in Sydney, it’s vastly cheaper to buy in the Melbourne market and it’s actually not unaffordable for first-home buyers. The situation in Sydney is far more dire, and the fact that the New South Wales government haven’t released such a package is probably more problematic for them.
Kevin: Yes. Already they’re starting to talk about it, though. There are a lot of ripples on the water about the fact that the state government in New South Wales may have to do something like this.
Nerida: They really should. When we look at Victoria, Victoria has been building a lot of housing for quite some time – for decades – and it’s got to a situation where both the Victorian economy is growing very strongly and the New South Wales economy is growing very strongly, and New South Wales and particularly Sydney has really been caught out with the fact that there’s just not enough housing and it’s becoming unaffordable not just to buyers but also for renters.
Kevin: Danni Addison, Victorian CEO for the Urban Development Institute, is very much behind this, saying things like, while they’re cautiously optimistic, they’re going to see how the market responds. But they’ve certainly said that the government pulling the lever in this way is going to change the momentum of the housing market. Would you agree with that?
Nerida: Yes, I think so. There’s a little bit of a view that some of the measures may lead to accelerated price growth, and I think that would be the case, but people in that sub-$600,000 price category where we do have a lot of first-home buyers and they are getting these cuts in stamp duty, it may lead to a bit more price growth than we really want to see.
But I think overall, the fact that the Victorian government has recognized the problem and has decided to do something and is actually looking at a range of measures is really positive, too, that they’re not just relying on one measure to increase affordability.
Kevin: That’s probably where a lot of governments have gone wrong in the past, too. Interesting to note that re-investors are not going to be receiving any stamp duty concessions. Is that going to put a bit of a dampener on that reinvestment or investor market?
Nerida: I don’t think so. I think there’s still enough housing available for everyone in Victoria. I think, though, this is really designed to help first-home buyers into the market and it’ll definitely help them. If you’re a first-home buyer and you can save $15,000, it makes a massive difference to your ability to buy. Trying to save $15,000 can take quite some time, and the government giving you that money and really helping with stamp duty is positive.
Kevin: Very much so. Nerida Conisbee from REA. Thank you so much for your time, Nerida.
Nerida: Thanks for having me.