Dave’s dilemma

I was interested to hear Treasurer Dave Tollner this week, when being asked about the changes to the first home buyers scheme, giving the following explanation.

The first home buyers grant no longer applies to the purchase of an existing house, from now on it will only apply to newly constructed houses. The intent was to bring about “affordability” by encouraging the construction of more new homes, while at the same time reducing price pressure on existing homes by taking the first home buyers off the list of prospective buyers.

When asked to explain how that was going to create more affordable housing Dave’s explanation was as follows: “We will release lots of land and encourage as much new construction as possible. Hopefully the changes to the First Home Buyers grant will assist with that. Market forces brought about by increased construction should bring prices down.”

So that is “the strategy” supposedly in play. Which is all well and good I suppose if you are not one of the first home buyers who will until such time as there is an oversupply of new homes be forced into outlaying considerably more to buy a home – somewhere around $200,000 above what they could have bought an existing home for. What a great start for those very few that can make the grade to borrow so much, let alone make the repayments.

However, I concede that if enough land is serviced and released at affordable prices it should bring greater affordability. That’s exactly why the community has been screaming long and loud for land release, for decades.

However, where Dave’s strategy falls down is that while he’s at one end of the Territory, spruiking up land release, his public service, in the form of the review into planning for the Territory, was at the other end of the Territory espousing “limited land release”, so as not to have an effect on the market – as they put it “to protect existing investment”.

This of course has been the problem all along! Deliberately stifled land release in order to prop up existing investors! This for Alice means instead of pushing things along at Kilgariff, and  doing a large enough construction to bring about economy of scale, hence affordability, we are going to be, and are already being, subjected to a slow dribbling development and land release that in my view will actually help inflate prices.

So the question I have out of all this is: who’s in charge, Dave? Which strategy is actually enacted, and if it’s yours, how are you going to sheet that message home through a bureaucracy of fat cats protecting their personal investment at the expense of the Territory future?

Me thinks the Tail is still wagging the Dog!

Might be time to get out the guillotine and lop it till it stops! In the meantime First Home Buyers would probably be better off to skip the grant funding if they can, and buy existing houses that will certainly take the pressure of the grant fund pool, if not the price of houses. Maybe that was the intention.

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