First Home Buyers got “totally suckered”

26 02 2011

A new survey has found First Home Buyers are selling up in droves, no longer able to afford their houses purchased with the lurer of free money from the First Home Buyers Boost.

The survey, conducted by Mortgage Choice shows 10 percent of first home buyers who have purchased within the last two years have either sold or are selling up.

If interest rates rise a further 1 percent, another 6 percent said they would sell. An additional 14 percent would flood the market if rates rise 1.5 percent.

Andrew Robb, Shadow Minister for Finance and Debt Reduction said young homeowners “got totally suckered”.

“The Government propped up the market by luring in young people but there were no warnings about what might happen within a year or two – with interest rates in particular.”

“Now young people have had a double whammy because not only have interest rates added $6000 a year to typical repayments, the cost of living is soaring, with electricity prices up nearly 40 per cent in three years, water up 27 per cent and rates up 15 per cent.”

Treasury minutes about the First Home Saver Accounts (FHSA) released under freedom of information said “The short term stimulus [BOOST] was designed to encourage people who had already been saving for a home to bring forward their purchase and prevent the collapse of the housing market. Contrary to this measure, the FHSA is designed to encourage saving over the medium to long term.”

If the first home buyers boost was designed to prevent the collapse of the housing market, one has to wonder what the government’s plan was when the stimulus finished and the unsustainable housing market built on record levels of household debt starts to collapse again. You can’t keep propping it up. 20 Feb 2011




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