Great News for Home Buyers and the Economy

| October 20, 2008

The doubling of the First Home Owners Grant and the tripling of the grant for those building new homes are expected to provide an immediate stimulus for new housing and help restore business confidence across the sector.

I am very pleased to report that the Prime Minister and the Treasurer have recently announced a $1.5 billion boost to confidence in the housing market in Australia.

First home buyers who are purchasing newly constructed properties will see the value of the First Home Owner Grant triple from $7,000 to $21,000 for newly constructed homes.

It is a very significant new investment. People who are purchasing existing homes will see the value of their First Home Owner Grant double from $7,000 to $14,000. These increased payments are effective immediately and will be available on all contracts entered into between now and 30 June 2009.

While our housing market has not seen the turbulence of overseas markets, lending finance for owner occupied housing did fall by 2.1 per cent in August against July and the number of dwelling units approved in August fell by 3.7 per cent against July, seasonally adjusted. This boost will increase confidence in the housing market coming particularly on top of the one per cent cut in interest rates. It will give significant extra assistance to young people, families and individuals thinking about entering the housing market. I think many of them will find that they bring forward their decision to purchase because of these extra measures. Encouraging new building is also particularly important in current economic circumstances.

We have seen a number of housing industry associations welcome this move very enthusiastically. The Housing Industry Association expects the initiative announced [on 14 October] to provide a boost of 15,000 in the production of new dwellings. Dr Ron Silberberg said:

“This measure will provide an immediate stimulus for new housing and help restore business confidence across the sector particularly in the building product manufacturing sector.”

From the Master Builders Association of Australia, Wilhelm Harnisch, the CEO, said:

“The tripling of the first homeowners grant for new homes will boost confidence…”

He went on to say:

“Kick starting the housing sector is a proven success formula for stimulating economic growth because of the multiplier effects it has on the broader economy in terms of providing jobs as well as stimulating the manufacturing and retail sectors.”

From the Residential Development Council, the executive director, Caryn Kakas, said:

“The tripling of the grant to $21,000 will get builders building again – and first home buyers buying again.

She went on to say:

“There has never been a better time to introduce this cash injection.”

Ms Kakas believes directing the first home owners grant at first home buyers buying new homes will not only help fix our critical shortage of housing but also provide a much needed boost to the economy.

This new measure is very important, it is great for first home buyers and it is great for the economy.

(This blog is based on the ideas I voiced in Question Time on Tuesday 14 October ‘08)

The Hon. Tanya Plibersek was elected to the Federal Parliament as the Member for Sydney in 1998 and became a shadow minister in 2004. During her time as a shadow minister, Tanya was responsible for a wide variety of issues including childcare, work and family, community, women, youth, human services and housing. Following the election of the Rudd Government in 2007, Tanya was appointed the Minister for Housing and the Minister for the Status of Women.



  1. daniel

    October 22, 2008 at 8:53 pm

    A disgraceful free kick to speculators to keep prices high

    So, you are going to give 14 or 21 k to first home buyers in an attempt to lure thousands of them to pony it up with a loan they can't afford so they can give twice what houses are worth to thousands of speculators who are in danger of realising that they have lost their imaginary Winnebago money.

    Tanya, you are the housing minister, not the minister for the protection of house price gamblers. It was well understood that the initial first home owners grant only increased the price of houses. This is either totally incompetent policy, or a wasteful and decietful attempt to keep house prices high. Please stop throwing even more good money after bad.

    Do you want to see housing become affordable? 

    Do you want to see house prices fall? 

    If the answers to the two questions are not the same, then who are you trying to kid?

    The quotes you have "justifying" this theft of our money are all from the representatives of the beneficiaries.

    For  a dose of sanity folks, check out

    "It's a remarkable delusion. People think they have found gold in their backyards" Robert Schiller

  2. Juiced

    October 22, 2008 at 9:30 pm

    Bad Policy
    I was appalled at your announcement that the Australian Government is increasing the First Home Buyers Grant.

    Research has shown that the First Home Buyers Grant has not made housing more affordable for working families in Australia. Perversely, it has done the opposite, made houses less affordable.

    If you are serious about housing affordability you should scrap these point scoring policies that add to demand and instead start seriously increasing supply of affordable housing.

  3. cor55

    October 22, 2008 at 9:59 pm

    The Evil Empire

    Tanya, you say critical shortage of housing, yet the government census shows 800,000 homes empty during census night. There are 5 vacent houses on my street alone, have been for the past 10 years. Now have a look at this article from the Public Policy Institute of California, published March 2004, entitled How Critical Is California'a Housing Shortage?

    "High housing prices, low vacancy rates, and low levels of new construction have convinced many observers that California is experiencing a critical housing shortage, especially in the state's largest metropolitan areas."

    We all know what happened to the Californian housing Bubble three years later. What other lies are in the air?

    The only boost to the economy the government sees, it that when a large mortgage is taken out of a bank, that money enters the economy, meaning more loans can be taken out on the basis of this additional capital. This cycle of phoney money (banks loan out 10 times the amount of capital they possess – and this additional loan money is used to loan again another 10 times the amount – ad infinitum) is what is propping up the economy, and making people believe they are rich because their home is 'worth' more, and more people suffering, because they cant pay back the unrealistic loan they were suckered in to buying by people like you.

    In the end, however, it is nothing but a house of cards, because eventually the $950 billion dollars worth of mortgages will be called in by the banks, and with the world economy faltering, what do you, Tanya, think will happen to a) the people who cant keep up with the mortgage they were sold by the predatory banking institutions, and b) the price of houses, and c) your credibility, based on the fact you are trying to bribe the people into taking out more of these crushing mortgages with a pathetic extra $7,000? I hope you sleep well at night, because with these glass beads you are tying to sell the natives, you shouldn't be.

  4. altakoi

    October 22, 2008 at 10:31 pm

    Housing is not a productive investment

    Dear Ms Plibersek,

    It is clear that everyone in the housing industry is thrilled with your using $1.5 billion to support their industry. It is a pity that other industries, like research into renewable energy, or upgrading agricultural infrastructure, or building rail networks, could not benefit from such largesse.

     If you want to prop up house prices, although it is logically inconsistent with the competent discharge of your portfolio responsibilities to provide affordable housing, then fine. However, I take issue with bland assertions that this is a sound economic investment rather than a sop to those who don't want to get off the property ride just yet.

     When the entirely disinterested Dr Ron Silberberg of the HIA states that "Kick starting the housing sector is a proven success formula for stimulating economic growth because of the multiplier effects it has on the broader economy in terms of providing jobs as well as stimulating the manufacturing and retail sectors" it is complete rubbish. The main multiplier effect housing has had on the broader economy is through peoples willingness to take on massive amounts of debt on the basis of their magically inflated equity in their houses. The debt, it is now clear to see, is purchased by banks on the international markets and is rapidly sending the country broke due to the increasing price of securing these lines of credit. Sadly, you cannot run an economy on selling the same units in Surrey Hills (or Toorak, Barton or wherever) at increasing prices.

    Your policy is simply good money after bad and, as a tax payer, I am appalled that you have used my money to pay the debts of a property market which has been involved, often willfully, in the most massive misallocation of resources in this countries history. The property market will and should fall, and I would appreciate your government not trying the bankrupt the country trying to avoid this inevitability.

  5. SirLes

    October 22, 2008 at 10:36 pm

    Tanya Plibersek, you’re a joke!!

    You can be held responsible for effectively bursting our bubble economy rather than letting the free market fall and correct. You have chosen to use taxpayer money, which chose not to participate in this bubble, to protect speculators that have made property unaffordable in the most spartially populated country in the world. Look at history Tanya! Google the Japan Recession in the 1990's and feel free to draw the parallels between us and them then.  You and your government should be held responsible for this failure in policy like any other failed business person. Shame on you and this labor government and may God save this country!!

  6. citizenOz

    October 23, 2008 at 1:44 am

    I am very disappointed by

    I am very disappointed by the governments decision to subsidise the banks and over-inlflated property market in this way.  It is widely accepted that the original FHOG was a failure (I beleive you even admitted this in the past Tanya), so doubling or tripling it is absurd.  It is obvious you care nothing for First Homebuyers as this merely puts home ownership beyond the reach of many for even longer. 

    I see that some mortgage lenders are even advertising to prospective homebuyers they no longer need a deposit as the FHOG will cover it!  Hello, is there anybody with a brain left in Australia I wonder?  Obviously not in government anyway.

    What happened to all the rhetoric before the elections about improving affordibility?  I understand that this is a complex issue and it is impossible to please all parties with your policies, however, incentivising young people into a grossly inflated bubble market in this way is totally irresponsible.

    I have faith in the markets and regardless of government meddling, the market will win out at the end of the day.  House prices will fall, these measures will only delay or worsen the inevitable. 

  7. not happy Tanya

    October 23, 2008 at 4:46 am

    Not happy Tanya

    Good God woman, have you taken leave of your senses?

    Is it left to me to remind you what you said, a little more than 12 months ago?

    When speaking on Housing affordability; National Summit on Housing Affordability – 2nd July 2007…."….One of the reasons for looking in particular at a savings vehicle to help first home buyers rather than simply increasing the First Home Owners Grant is because we don't want to see an inflation in the housing market. If you simply double the First Home Owners Grant as many Liberal backbenchers have suggested recently, you would see that sort of inflation and indeed average house prices have more than doubled since the First Home Owners Grant was introduced".

    And what about the recent Senate Select Committee on Housing Affordability, on the First Home Buyers Grant? 

    It found that after its introduction, the grant inflated house prices by more than the grant amount, and therefore distorted the market for new entrants, only benefiting existing home owners.

    Can't happen again?

    Perhaps I can draw your attention to the following article:…5013951,00.html
    By Justin Vallejo and Clementine Cuneo October 18, 2008 09:14am

    GREEDY home sellers are taking properties off the market and re-listing them at higher prices in an attempt to cash-in off first home buyers.

    Real estate industry insiders have told The Daily Telegraph of an almost immediate move to increase prices, in one case up to $30,000.

    There have also been moves to change the sale from private treaty to auction after the first home owners grant doubled.

    The country's largest real estate agencies meanwhile expect a "re-branding" campaign and a change in marketing to target first home buyers and investors at auctions in wake of the $7000 grant increase.

    "Vendors are already asking to re-list their property and if we tell them it's not an achievable amount, they take their business to a different real estate agent with promises of greatly inflated prices," a real estate agent, who did not want to be named, said.

    "It worked in 2001 and people have long memories."

    How dare you use my hard earned money, paid to the government by way of taxes, to be squandered in this manner?

    And what about if/when first home buyers lose their overpriced houses due to unemployment or the inevitable rise in interest rates. Is is possible to mount a class action law suit against the Prime Minister (who urged first home buyers on national television that now is a great time to buy a house) and the Housing Minister? Interesting times.

    You should be honest with homebuyers and tell them that house prices are unaffordable in Australia now. Better to disappoint them up front than devastate them when their homes are foreclosed.

  8. Mr Medved

    October 23, 2008 at 9:58 am

    Home Sellers Grant

    Hmm… let's see. The minister stated last year that a home buyer's grant would be inflationary and only decrease affordability by pushing up prices (which is true), yet the government sees it fit to not only endorse the grant but double it! This grant does not benefit buyers, it benefits the real estate industry (no doubt providers of party contributions) and home SELLERS.

    Perhaps the worst aspect is that the housing market/bubble is one gigantic ponzi scheme, and the government is encouraging people to join in late in the cycle. These poor suckers are in for a world of misery and will be staring down the barrel of negative equity. This is ON TOP of an economic slowdown where forecasts have predicted hundreds of thousands of people out of work next year. How can people afford to pay for bubble-priced houses without a job?!

    The only possible explanations I can give for such a dangerously irresponsible use of taxpayer dollars is the Labor party is pandering figures within the real estate and banking industries, or they are completely and utterly incompetent.

  9. daniel

    October 23, 2008 at 10:43 am

    silly attempt to rewrite history Tanya and staff

    That was an interesting quote "not happy". I'd be very interested to know when you looked it up. I tried to find a link to it using google, and got this:

    "This page is currently offline. Please check again at a later date."


     But google cache won't let you get away with that:

    There it is in all it's glory: "PLIBERSEK: Can I just add to that Kevin? One of the reasons for looking in particular at a savings vehicle to help first home buyers rather than simply increasing the First Home Owners Grant is because we don’t want to see an inflation in the housing market. If you simply double the First Home Owners Grant as many Liberal backbenchers have suggested recently, you would see that sort of inflation and indeed average house prices have more than doubled since the First Home Owners Grant was introduced."

    Bubblepedia contains a wiki, and I encourage people to use it to preserve statements like this one that politicians are trying to forget.


  10. TheClaw

    October 23, 2008 at 11:01 am

    Disgraceful goosing of house prices
    Giving people more money to pay for existing houses will increase the prices of these existing houses, not create extra housing. I would have thought the housing minister would be trying to get all PEOPLE into decent housing, but no, the housing minister is only concerned with the health of the "housing market" which is decoded to mean high PRICES. THe housing minister talks about "investment" and economic confidence. What rubbish! The purpose of housing should firstly be shelter with monetary considerations perhaps a distant second.

  11. cor55

    October 24, 2008 at 12:28 am


    If memory serves, the ex-NSW minister for housing, Matt Brown, owned 14 investment properties. Does anyone think that he was doing all he could to keep the cost of housing affordable for his fellow Australians, or was he trying to keep prices high to protect his investment?

    Tanya, please tell me it isn't true that you are a talking head for the building industry?

  12. Foundation

    October 24, 2008 at 2:09 am


    I concur with the previous posters, this is poor policy, and clearly contradictory to the previously stated aim of increased housing affordability.

     Ms Plibersek said:

    "While our housing market has not seen the turbulence of overseas markets, lending finance for owner occupied housing did fall by 2.1 per cent in August against July and the number of dwelling units approved in August fell by 3.7 per cent against July, seasonally adjusted."

    It's actually much 'worse' than that. Lending finance, down 29% in August compared to a year earlier (ABS 5671.0 Table 1). The number of Owner Occupier loans for established housing down 31% over the same period, down 25% for construction, down 51% for purchase of new housing (ABS 5609.0 Table 1). Meanwhile the inventories of unsold homes have been growing steadily for over a year and have accelerated markedly in the last 3 months. Our housing market is indeed in a 'dire' state.

    But this is NOT a BAD THING. It does not warrant 'rescuing' (i.e. bailing out). It is the natural correction in a market that became overheated and overpriced through a combination of easy credit, lax lending standards, poor government policy (negative gearing, FHOG, CGT exemption), great lashings of public delusion and grand mania! Prices simply got too high, and finally people were unable or unwilling to stretch themselves further. Now you seem hell-bent on preventing this correction? WHY? Lower housing prices are GOOD for the country in the long term. Lower housing prices enable us to put more of our income to productive use (or for that matter, take a little time to improve the quality of our lives rather than the price of them). Higher housing prices actually make us (us being ALL AUSTRALIANS over the fullness of time) poorer!

    Now I fully support the FHOG, and the bonus payment, for new homes. At least that portion will do something productive. But the FHOG on existing homes does nothing but push prices to a higher level than they would otherwise be. In turn people will have to borrow more than they otherwise would have (particularly those who are ineligible for the grant). Encouraging borrowing for completely unproductive activity is bad policy. It leaves us more debt without increasing our capacity to repay it!

    "I think many of them will find that they bring forward their decision to purchase because of these extra measures."

    Do you understand that this is a zero-sum game? If you bring forward future demand to compensate for slumping demand today, you’ll have slumping demand in the future (when we get there)? Then what? $100k FHOG mega-bucks mega-boost?

    What's with all the quotes from the industry? Of course they'll say it's a great idea – it will go largely into their pockets. So quoting them doesn't really paint you in the best light to a thinking person.

    And finally, let me express my utter disappointment with yourself, your ministership and your party. I was greatly encouraged in the lead-up to the last election by the promise of a Housing Minister. We hadn't had one before. I had hopes that such a person would articulate a clear position on the future aim for housing in this country. I figured that there would be open debate in this country, a dialogue between people and people, and between people and government, that this would form the foundation upon which the aims for Housing would be constructed. I thought that from that point there would be great efforts made to ensure that over time we became nearer that goal, not further away from it.

    It turns out not to be. Apparently, the main priority for the Housing minister is to ensure that the price of housing only ever goes up. Well, that's NOT a noble goal, and even if it was, I'm afraid you're about to learn a very harsh lesson about gravity. We have $1.5 trillion dollars of bubble wealth created by the last 10 years of house price bubble but not yet paid for (another $600 billion has already been paid for with debt). If home prices fall, Australians will lose $1.5 trillion dollars of illusory wealth that never really existed in the first place. That sounds bad. But if home prices stay high, that $1.5 trillion dollars of bubble must be added to existing debt over the next 15 years. Believe me, that would be worse. But it's not even possible. The only way this bubble is going away is the same way those in the USA, NZ, UK, Spain, Ireland and elsewhere have and are going away. POP!

    All the best, Ms Plibersek. I voted for your party at the last election, largely because they expressed a clear intention to tackle housing issues head-on. I assure you I will be voting for the Greens next election. That's something I have never done before and never thought I would do. But I'm sickened to the core by your policy, and even more so by your pathetic attempt to justify it. To paint what you’ve done as a positive thing for Australia is totally objectionable.

  13. canberrajoe

    October 24, 2008 at 3:06 am

    why, why why…

    I am utterly confused and puzzled by this seemingly random modification to the FHOG.  This is NOT good news to FHBs.  Perhaps to people trying to dump overpriced properties onto naive FHBs, but that is about it.

    I have to say I am extremely disappointed in Labour's failure to represent its electorate in almost every single area of importance.

    Housing – housing is not affordable because it is too expensive.  Accordingly, either wages have to go up (since we still haven't gotten rid of AWAs that isn't going to happen–wages aren't even keeping pace with inflation) or house prices have to go down.  

     Increasing the FHB grant simply props up over-inflated house prices a little longer and delays the inevitable price crash a little longer.  It is not only not-helpful, it is dangerous in that it entices FHBs who really have no business buying at these levels to enter the housing market.

    The Aussie economy CANNOT be saved by an ever inflating housing bubble.  It is time we recognised this and set about measures to reduce housing prices to a rational level instead of using taxpayer monies to encourage reckless speculation.

     A very disappointing outcome by a government that I had hoped would eschew populist politics in favor of sound, long-term policy planning.



  14. Dave

    October 24, 2008 at 10:31 am

    Very poor policy – a disgrace – pick up your act

    If Tanya had studied common sense instead of political science she might have half a clue.  This is a disgrace. 

    Firstly it is grossly unfair to tax those that did NOT participate in this debt fueled speculative nonsense and hand it over to those who did (same applies for the guarantee of our bank's borrowing offshore – they deserve to have their credit applicaitons knocked back considering who and what they are borrowing for and I as a taxpayer do NOT wish to subsidise them.)

    Secondly it is simply bad policy as it will only delay the inevitable – house prices will crash – but this time it will bring down the government (the taxpayer) and the innocent (me) with it.

    Pick your act up.  Show some political courage.  Absolute disgrace.  What really rubs it in is when Tanya writes it up as something positive – do politicians have no shame?

  15. Annabel

    October 24, 2008 at 10:49 pm

    bad logic
    If it's not working – double it. That's just bad logic. Come on Australia, don't let yourselves be bought so easily.

  16. Giacomo

    October 26, 2008 at 8:19 am

    A Lame Brain Idea!
    Good on you, Queen Canute Tanya!  Trying to pump the real estate bubble up further, eh? It's about to burst, for God's sake woman! Let it go, and stop pouring our extremely hard-earned taxes DOWN THE DRAIN! Who are you representing by doing this? Even the real estate industry knows the market must now be left alone to find its own level. Silly, silly, silly! [sigh!]

  17. homes4aussies

    October 26, 2008 at 10:38 pm

    Forward-backwards land

    Ms Plibersek

    Firstly, you will know from my correspondence of late 2007 that I proposed, in the short term, the differentiating of newly constructed housing from existing housing in order to produce a supply side response. So I am pleased to see that you took on board the strategy that I suggested.

    With that in mind, I should state that it is critical when finalising the new FHOG conditions that the definition of “newly constructed” should be that construction was initiated AFTER the date that your policy was announced. Otherwise, instead of providing a stimulus for the building industry to build new housing, it may just be used to clear their inventory of already built houses.

    I strongly disagree with your doubling of the FHOG on existing housing.

    A cynical view may find this part of the policy rather disingenuously framed as giving a helping hand to first home buyers. While, in reality, it was a piece of political expediency with the dual aims of 1) responding to the reality that your Government’s meddling in markets to keep interest rates lower was favouring mortgage holders at the expense of other worthy members of society – i.e. young Australians saving to buy a home when affordability levels improved, as well as older Australians struggling with increasing costs (who were given a cash boost, rightly in my view), and 2) putting a floor under bubble high house prices by manipulating young Australians with an all too frequently used political approach of a carrot (the extra FHOG) in conjunction with a stick (being the reigniting of fears amongst young Australians that they may never be able to afford to buy a home as the increase in the FHOG in 2000 was partly responsible for creating the housing price bubble.)

    (The cynical view is supported by the fact – as highlighted above – that you have been strident in your opposition to increasing the FHOG.)

    A much kinder view of your Government’s intentions would be that you really did want to help FHBs.

    Irrespective of your intentions, what is undeniable is that it is bad policy because of one major point. Already we see young Australian families struggling under the weight of huge mortgages DUE TO OUR BUBBLE HIGH HOUSE PRICES.

    Encouraging more young Australians to get in the same position with the introduction of this policy – and then Mr Rudd openly encouraging a young Aussie couple to buy AT THESE PRICES on television – is irresponsible.

    The house price bubble has already popped (ABS June data showed a drop in the 8 city index, and most recent RP Data shows that house prices in all capital cities are falling) due to young Aussies wising up and realising that renting is a far better proposition at these prices. And they know that each 2% fall in the price of a capital city median priced house is GREATER than the extra $7,000 in the FHOG.

    So, although I think it highly unlikely that this strategy will put a floor under house prices – in fact, I expect house prices to fall 30% or more over the next few years – it is extremely unfortunate that your Government has chosen to attempt to save the Australian economy by encouraging young Australians to go into very significant levels of debt to purchase (what is universally accepted to be) overpriced assets.

    And it is troubling that your Government would choose to vest so much political capital in overpriced housing.

    It would be far better policy if your Government responded to the real problem – that Australians are becoming homeless because there is not sufficient AFFORDABLE rental accommodation (even though the Government gives welfare of around $9 billion a year to middle and high income Australians in the form of the “property investor tax rorts” – using George Megalogenis’ terminology).

    On the positive side, I think that your Government has introduced a number of good policies on housing especially the First Home Savers Accounts (FHSAs) and the National Rental Affordability Scheme (NRAS).

    However, I am certain that you will realise that these initiatives must be seen in the context of the entire policy framework. And I am certain that, if the FHSA policy is a success in terms of attracting FHBs, and if the property investor tax rorts remain in place, then buy late 2012 when the first FHSA account holders access their funds prices will have moved off their post bubble lows and will likely INCREASE BY MORE THAN THE VALUE OF THOSE ACCOUNTS. In other words, investors will get all of the benefit of the FHBs hard earned savings and the Government co-contribution.

    I was invited to provide a submission to the Senate Committee looking at the NRAS. The basis of my submission was that in Australia we need to restructure our rental industry so that large scale investors provide the majority of housing to renting Australians as this will have the benefit of improved long term security for tenants and more stable housing costs.

    I see the NRAS as a very important start in that restructuring. My only concern is that it is not sufficiently ambitious. With the slowing in housing construction, the shameful trend of Australians becoming homeless due to spiralling rents is likely to increase. Moreover, I note that your first call for tenders was over-subscribed by a factor of 200%.

    Surely you can fast-track and increase the NRAS with the Government now looking to stimulate the economy by spending on infrastructure.

    There is no better infrastructure than a secure and affordable roof over an Aussie’s head!

    So, the FHSAs and the NRAS will address the affordable rental crisis and alleviate homelessness. I just find it puzzling why you chose to take a backward step by increasing the FHOG on existing housing rather than pushing forward with your much better policy ideas?

  18. homes4aussies

    October 27, 2008 at 2:02 am

    Some well respected economists agree

    Just wanted to add quickly that after now reading the weekend AFR (25-26 October), I was interested that on the penultimate page Brian Toohey echoed many of the comments made above, and he states that Saul Eslake has made the same comment as me – that the NRAS should have been fast-tracked and expanded rather than increasing the FHOG!

  19. Corydora

    October 29, 2008 at 4:59 pm

    Poor judgement that creates additional financial instability

    I think the government knows all full too well that this grant is not of the benefit first home buyers. It's intent is to prop up property prices. It may initially cause property prices to be retained at a higher level, however in time it will prove to further destabilize the economy, and our financial institutions will be more vulnerable than they otherwise been. People will be taking out higher mortgages. The ultimate result is that the value of mortgage defaults will be at a higher level.

    What I recommend the government to do is to fully research the property boom and depression of the 1890's, as it is of greater relevance to today's circumstances than that of the 1930's. Back then, the initial mortgage defaults were over-leveraged homebuyers. Primarily first home buyers, those who had borrowed most recently and those who had lost their jobs. When property prices fall, so do rental prices in a similar proportion. Landlords eventually made up the vast majority of  bankruptcies.

    Government apparently do not understand the underlying foundation of depressions. It is a combination of maldistribution of wealth and high levels of debt – in particular private debt. This policy, and even worse – negative gearing, and deregulated lending have resulted in critical maldistribution of wealth. It redistributes money from the poor and funnels into to more wealthy. People are an investment, and when you have a disproportionate wealth placed into a fewer people, the economy becomes more vulnerable. The economy is in the beginning phrase of a correction. Government needs assist the recovery, and not resist the correction. Resistance is futile, and will only add further hardship than would have been otherwise.

    I would recommend the following books:

    "The Rise and Fall of Marvellous Melbourne" by Graeme Davison

    "The Land Boomers" by Michael Cannon 

  20. GeoffB

    November 2, 2008 at 12:40 pm

    I would like a home loan please

    I am a Carer. More than that I recently became an Aged Carer. In doing so I lost $33.03 a fortnight in rent assistance. WE; the person I care for and I, must move, in losing that $33.03 each fortnight WE can no longer afford to live here. However because rents are so high, WE must move even further away from the services she needs.

     You speak about putting 1.5 billion dollars into the economy for housing, so how much of that is going to go into the pockets of people with $40,000,000 houses on Sydney harbour to maintain. How about giving me a loan for around $85,000 and the person I look after a loan for the same. WE can't go any lower, and WE have nowhere to go except far far away from the city, where housing cost are less. At least WE will be value for money, as WE can only repay that loan, especially as it will be deducted directly from our pensions each fortnight.

     I bet I don't hear back from you, once upon a time there were terminating building societies run by state governments. Only some bright spark told them the money would be better handles by private industry. Well it hasn't, so how about taking the lead, and getting back to basics.

     I look forward to not hearing from you.



  21. Peachy

    November 22, 2008 at 12:58 pm

    How about a response?

    Hey Tanya

     I periodically check your blog in anticipation of your response to the issues raised in the comments and I am disappointed to see no back chat.  

    Blogging is meant to be an interactive medium, through which you can open a dialogue with your constituents, it is not just another platform for broadcasting government media releases and spin.

    Looking forward to more interaction!


  22. olgabodrova

    November 27, 2008 at 4:35 am

    No FHOG for first home co-owners (when buying with investors)

    I cannot argue about the increased amount of FHOG: this policy seems to be designed to boost consumer confidence in difficult economic times, which is probably a good thing – but I am not an expert and people who have commented previously do seem to have a point.

    But I do have a question about FHOG & stamp duty concession in general as applicable to co-ownership of property.

    As the rules stand now, if you enter into a co-ownership agreement (‘tenancy in common') with someone willing to help you out financially (a family member, say your parents or your sibling, for example) and they are not first home buyers, you are not entitled to neither FHOG (not even half of it as it would be the case if both buyers were qualified) nor stamp duty exemption or even concession – because you are buying only 50% of the property.

    Moreover, by becoming a home co-owner, you forfeit your rights to these benefits forever.

    (Of course, if you do not live in the property you are co-purchasing and it is an investment property for both co-owners, you may be eligible for FHOG in the future if you purchase another property which you will occupy.)

    But let's face it, co-ownership is most attractive for those who would otherwise be unable to purchase on their own a property to live in (never mind investment) and for them co-ownership might be the only option available. A 50% of a two bedroom apartment in some suburbs for instance could be equal to a 100% value of a one bedroom apartment, and it's not small money.

    So my question is, if co-ownership of property is accepted and legalised as a measure to encourage first home buyers to move from home renting to home ownership, why cannot Government make one step further and make people who buy property together under a co-ownership framework eligible for these benefits on an equal footing (or some concessional level) with other first home buyers?

  23. Peachy

    December 5, 2008 at 5:44 am

    Hey OlgabodrovaYou say “But

    Hey Olgabodrova

    You say "But let's face it, co-ownership is most attractive for those who would otherwise be unable to purchase on their own a property to live in (never mind investment) and for them co-ownership might be the only option available. "

    If you can't afford it – don't buy it!  This 'have to buy' attitude among most Australians (promoted by Governments who think that reducing house prices are a 'problem') is the reason why you can't afford it.  Don't be part of the problem, be part of the solution.

    Keep your money in the bank or under your mattress- don't give it to property speculators and certainly don't get your family on the hook for half of a massive debt just to gratify your purchasing binge.



  24. olgabodrova

    December 8, 2008 at 12:57 am

    It’s not about ‘purchasing binge’,

    It's about trying to build some sort of security for my family in the form of owning the place we live in – or at least part of it. Since the consistent message out there is that ‘we are responsible for our own retirement', standing on the sidelines waiting for property prices to go down seems unwise to me – because they never will.

  25. daniel

    March 5, 2009 at 7:41 pm

    congratulations Tanya Plibersek – it worked.

    Here's the face of this madness.

    "FROM the block of land they have just bought, teenagers Matthew Tregent and Sarah Zajac can see Melbourne's skyline 18 kilometres to the east and a field of construction at their feet.

    By October, the 19-year-olds plan to be living here, in their own three-bedroom home on 464 square metres of a Deer Park housing estate.

    With $26,000 in government grants and the $5000 they saved after completing school last year, Mr Tregent and Ms Zajac, and thousands like them, appear to be keeping Melbourne's outer suburbs growing amid the gloom."

    Good work, you kept their builder / land price gambler alive for a few more months. Guess who gets to pay for the bailout too?

    Cat got your toungue?