Move to double Qld first-homeowner grant to $30,000 slammed as ‘bullsh*t’

A prominent economist says the Palaszcuk Government’s move to double the first-homeowner grant to $30,000 will make a bad policy worse. VOTE IN OUR POLL

Doubling the first-homeowner grant to $30,000 will make a bad policy worse independent economist Saul Eslake has said, warning the cost of housing will increase as a result.

It comes as the state government announced it would double the first home owner grant from $15,000 to $30,000 from November 20 until mid-2025 in a bid to help about 12,000 people into new homes.

But Mr Eslake said Australia had 60 years of evidence that giving cash to home buyers to let them pay more for housing than they otherwise would results in more expensive housing, not in more people owning their own home.

Economist Saul Eslake has slammed the Palaszczuk Government’s policy. Picture: Chris Kidd

“It’s hard to think of a policy that governments have pursued for so long, in the face of such incontrovertible evidence that it doesn’t work, than the policy of giving cash to first home buyers in the belief that it increases the homeownership rate,” he said.

“After 60 years I think you’re entitled to be cynical as to why. And the answer is that for all the shedding of crocodile tears that people do about the difficulties faced by aspiring young homeowners, in any given year there are only about 100,000 of them on average.

“Whereas there’s 65 per cent still of households (nationally) that own their own homes, either with a mortgage or outright.

“There are about 15 per cent of taxpayers who own at least one investment property and they like governments to do things that keep putting upward pressure on house prices.”

Mr Eslake said there were essentially 100,000 votes and close to 10 million votes nationally for doing things that put pressure on house prices.

“The effect of this (doubling the home owner grant) will be to push up prices, probably by the amount of the grant,” he said.

A government spokeswoman said the temporary boost to the grant was focused on “new supply, not bidding up the price of existing supply” and that more supply takes pressure off the existing stock.

An estimated 4000 first home builders in a “normal year” were expected to benefit, so the “relatively small group” was not expected to “shift the entire market”.

Mr Eslake said this argument was “bulls***”.

He said concessions for first home owners overall would be better termed “second home vendors’ grants” as “that’s where the money ends up”.

The surprise step will see an increase in the grant from $15,000 to $30,000 from November 20 until mid-2025. Picture: Brendan Radke

Announcing the police, the government said the $210m increase to the package giving people access to more money to buy and build new homes will not be inflationary and more supply will take pressure off existing stock.

Queenslanders must be buying or building a new home valued at less than $750,000, including land and any contract variations; be 18 years or older; and have never previously owned a home in Australia to be eligible.

The temporary increase makes the grant as generous as Tasmania’s scheme, and triple what is offered in NSW, Victoria, and Western Australia. The ACT does not offer first-homebuyer grants.

Opposition Leader David Crisafulli last month confirmed he was closely eyeing tax relief and incentives to unlock more housing supply if elected next year.

A total of $365m in first-homebuyer grants was handed out to 24,000 households in Queensland in the past three years.

Queensland Premier Annastacia Palaszczuk. Picture: Dan Peled / NCA NewsWire

Premier Annastacia Palaszczuk said she understood how much the cost of living was affecting Queenslanders, particularly first-home buyers.

“Our government is committed to easing these pressures by delivering the largest cost-of-living relief package anywhere in the nation,” she said.

“I want to see home ownership rates continue to rise, which is why our government is stepping up to lend a helping hand.”

The Productivity Commission, in a review last year, warned stamp duty concessions and first-homebuyer grants risked making housing less affordable. “There is also a risk that, over time, governments may fuel an ‘assistance spiral’ … (making) house prices more expensive by increasing demand, prompting governments to increase assistance, pushing up prices further, and on it goes,” the report states.

The commission called for first-home owner grants and stamp duty concessions to be phased out, saying the money was better spent on battling homelessness.

A government spokeswoman said the boost was focused on “new supply, not bidding up the price of existing supply” and that more supply took pressure off existing stock.

An estimated 4000 first-home buyers in a “normal year” were expected to benefit, so the “small group” was not expected to “shift the entire market”.