The idiocy of attacks on the PM’s first home buyers plan

Prime Minister Scott Morrison in Darwin on May 17, 2022. (Photo by Asanka Ratnayake/Getty Images)

Here’s an idea – why don’t we ban people from buying their first home?

We really can’t have first home buyers forcing up the prices that have to be paid by people, who are cashing in their tax-free capital profits and trading up to a bigger home – or indeed, property investors buying their second, third or indeed fifth property.

Or what about the exact alternative: ban people from buying a second property? Not just in addition to their first, but even to replace their first?

That would certainly take the heat out of the property market.

Or, we could just prohibit banks from making home loans of more than, say, $400k.

If you can’t borrow $600k or $800k or indeed $1m-plus, you sure as hell can’t bid up the price too far.

Almost all the negative reaction to the government’s plan to let FH-Buyers access some of their super, from the so-called economists to the industry super funds, has been just plain nauseating.

It combines stupidity with self-interest.

My goodness, if people invested some of their super directly into a property investment – their own home – the fees that industry super funds charged for doing exactly the same thing for those people would fall.

Prime Minister Scott Morrison in Darwin on May 17. Picture: Asanka Ratnayake/Getty Images

What else is a shareholding in an Australian bank, but indirectly an investment in residential property?

The point about the – true, deliberately exaggerated - examples I opened with, and which would zip straight and way, way over the heads of 98.7 per cent of the so-called economists, is that it sure ain’t FH-Buyers who have been the big factor in driving up property prices.

Apart from the fact, that is, that for every first home buyer there are somewhere between three and four second home buyers/investors.

What’s been driving up property prices is the way everybody except FH-Buyers comes to the auction or sale advantaged in some big way by deliberate policy decisions, which have put big dollars in their hands.

The second home buyer, the person trading up, has a huge deposit which has come from the tax-free capital gain on selling the first home; along with the equity they’ve been able to build with repayments instead of rent, at the very low interest rates, courtesy of the Reserve Bank.

The investor probably has all that; he or she also has all the cash-flow tax advantages from negative gearing, unavailable obviously to the FH-Buyer.

In the most direct sense, all that has been far more potent in pushing up property prices than the FH-Buyer struggling to save a deposit, only to be gazumped by someone with, say, a $200k tax-free capital gain from selling their first – or second, or third – home.

The proposal doesn’t even level the field for FH-Buyers versus the rest; it just makes it a tiny bit less un-level.

And it does it not by a taxpayer handout; but by letting them use their own money to build their deposit! What could be more dastardly than that!

Have these morons considered the alt-factual? Of course not.

That if instead of being forced to plough the money into super, they could have saved it directly.

Or would that have been unacceptable?

No, no; you are just not allowed to save your money to get a sufficient deposit. You are supposed to get your deposit by selling a home and cashing in a tax-free gain.

A final abbreviated point.

The money is still an investment of their super; it’s just that it’s invested in their property until they sell it; as opposed to being, say, in the share market or indeed other property.

And when they sell it, the investment becomes cash in the super fund, in exactly the same way as when the super fund sells, say, shares.