Prices will rise for Victorian first-home buyers following stamp duty cut, experts say
The really disappointing thing about the stamp duty cuts coming in from 1st July is that there is likely to be an increase in prices by at least the amount of savings for first home buyers. Buying a $600,000 property will cost about $15,000 less from Saturday (there was already a 50% discount in place). But the affordability will likely simply increase competition. Incentives and discounts by Government have been offered before with demonstrably disastrous financial results for the nominal beneficiaries. But the Government can point to how it is helping this class in what seems at face value to be a wonderful initiative. Very cynical.
As for investors, it’s not only the 1st July that brings in unwelcome changes (including restricting access to depreciation). The APRA imposition of a 10% growth in lending on banks to investors has enabled them to justify increased rates without general interest rates being increased. A win for the banks and a win for the general economy.Not a bad outcome; unless you are an investor. Although providing cover for the banks to charge more (they dropped rates for owner-occupiers by a much more modest %), it is still a welcome outcome to those gradually being priced out by the competition by investors. Loans to investors have been dropping month by month.
With the exception of the properties priced within reach of 1st home buyers, the drop in demand is now impacting competition and this is feeding into prices. A ray of sunshine for resigned buyers is trying to break through; prices are just starting to falter. With the exception of properties at the cheaper end, this quarter and the next will likely be seen as the high point for a little while.