|Graph from this paper|
Others blame the State Government for not doing enough to force councils to rezone land to encourage higher density developments.
It's also easy to blame the Federal Government for excessive immigration. Or the Baby Bonus, which was created, at least in part, to encourage procreation.
Maybe it's just the inevitable consequence of living in a city that is widely regarded (by most) as being a thoroughly excellent city to live in.
It's probably all of those reasons. Of course, it doesn't really matter why it is so expensive - it just is, and the government needs to deal with that reality.
In recent years, a number of steps have been taken. New land is continually being released to developers - although eventually that land starts to become so remote from the rest of Sydney that the process becomes a farce.
Continuing to release land in the Campbelltown area (for example) is certainly necessary. But it can only be part of the solution - it is incredibly time consuming for those residents to commute to the Sydney CBD (or, for that matter, any of the "cities" that make up the Greater Sydney, except for Campbelltown itself).
|From the NSW Planning and Infrastructure website|
In my local area (the North Shore) this has caused significant protest as the feel of quiet suburban streets has been wrecked by the construction of large apartment blocks. No doubt there have been similar experiences across Sydney.
But, at the end of the day, house prices have continued to rise.
|Graph from here|
This makes intuitive sense. If house prices are out of reach, then why not give those trying to buy into the market a helping hand? If you've just sold a home, then odds are you have a benefited from the inexorable rise in prices - but a first home buyer does not have that advantage.
The grant was initially $7000. And, in the spirit of full disclosure, I gratefully accepted that sum when the wife and I bought our first home a few years ago.
The problem is that the research suggests that these steps did nothing to make homes more affordable for first home buyers (see for example this, or this)
Those who are purchasing their first home have particular preferences that differ from (say) families with kids, or retirees.
This meant that, where a vendor had a home that was attractive to a first home buyer, there would be a multitude of buyers who all had the backing of the grant.
As a result, in general, the price of the home was increased by more or less the value of the grant as bidders pushed up the price. The only people that benefited were the people who had bought in before the introduction of the grant.
Moreover, in light of what happened in the global economy in the last 5 years, there should be a level of concern about throwing money at first home buyers to assist them to buy into the market. The money would, in most cases, be used to assist the purchaser to get a deposit together.
There are good reasons why banks require a deposit. One of those is to show the bank that the borrower has the capacity to cobble together cash over a period of time, meaning that the borrower is more likely to be able to effectively budget well enough to repay a home loan.
Last year the rules were changed. When the state budget was released last year it was announced that, from 1 October 2012, the grant would increase to $15 000, but would apply only to new homes.
This made the grant far less about new home buyers and far more about propping up the building industry. Which is fair enough.
Given that the announcement was made in June 2012, it should hardly be surprising that there was a great deal of marketing along the lines of:
|Graph from here|
The natural consequence is depressed figures for the quarter following the removal of the payment.
How much of the fall can be blamed on the amendment of the grant? It is impossible to tell. It would be helpful if the (otherwise outstanding) ABS provided further breakdown of the first home buyer purchases into new and existing properties, but I don't think it does.
In all those circumstances, this story that appeared on the SMH website today jarred with me.
|Full story here|
The total number of new dwellings purchased has fallen in the last quarter.:
|Total number of new dwelling purchases in nsw (source)|
|Total number of established dwellings purchased (source)|
If these first home buyers want to buy a new dwelling, the payment has doubled. Of course, the cost of those dwellings will no doubt be significantly higher than it would be without throwing money at first home buyers, but that is a different discussion.
As for those first home buyers who do want to buy an established dwelling - the cost of that dwelling will be significantly less given that most of the potential buyers will no longer have an extra $7 000 from the government backing them up.
The government has stopped pretending that the new home buyers grant would make housing more affordable for first home buyers, and is rather focussing on propping up the building industry.
Whether they should be doing so is another issue. But have they "abandoned first home buyers"? Hardly.