$20,000 BONUS TO LIVE IN THE COUNTRY
Did you see the Victorian government increased its first homeowners grant to $20K for regional buyers?
They also released over the weekend a waving of stamp duty for first home owners for properties under $600K which fazes out between $600-$750K.
However as in the past, developers will just lift prices due to the extra demand. With the government telegraphing the changes, its very likely you will see developers lift the prices straight away for new properties. As always the price rises will be greater than the value of the grants, this always happens. This is simply because buyers now have an extra $20k which the banks will allow them to leverage against – that is if a 20% deposit is required, first home buyers can borrow another $80k + $20k, their new deposit, giving them in simple terms another $100,000 to spend.
And this fat allows the developer to gouge bigger profits!
Its likely that the boost will be a short term boost and won’t make much difference long term. If they don’t have jobs in these regional areas, then the young people will not stay. If they cannot handle the commute from Geelong into Melbourne, then they won’t last long living there.
In the short to medium term, there will be price rises in Geelong and also to a lesser extent Ballarat and Bendigo. With the longer hours people are working, adding a 1.5-2 hour commute is not going to appeal to most people for very long.
Always remember it’s the True Drivers that must capitalise back into the land prices. Infrastructure, Technology, Population, Credit and Government Granted Licences – now they are the ones to watch!
I think a 20-30% lift in property values by 2020 is about right in the regional centres. Only 17,000 commute from Geelong to Melbourne daily and 12,000 of them drive. But they really need Jobs to keep the Population ticking over and quality Infrastructure for sustained price growth. Think booming regional mining towns – with volatile population flows and restricted job opportunities.
It’s all about the drivers manifesting back into the land price. Unfortunately, I just can’t see that happening long term due to the nature of the growing service based industries that centre in the capital cities. Couple this with the lifestyle opportunities and the impact of technological gains, the cities have it all over the regional centres.
I do however see some pain for off the plan in Melbourne city due to the other announcement of the Victorian government of removing stamp duty concessions for investors purchasing off the plan properties.
There’s likely to be a reduced demand from investors and I’m not sure that first home buyers will pick up the slack in the CBD and surrounds. Further pain is likely for the large high rise investor type properties – just another reason to always look for good owner occupier style properties in areas with high demand…..
Oh and did you also hear just a few days before the Vic Premier declared his plan to unlock land for 17 new suburbs in Melbourne?
Believe me, increasing the supply of land will make land no more affordable than will increasing grants to first home buyers. In fact, both will just do the just exact opposite.
The Team at Calnan Flack and myself are always available to assist with planning and implementing the building of your property portfolio. We will help you untangle the mire of laws and regulations which differ from state to state and also with the purchasing entity. As well, as this we will explain how you need the drivers of property prices working for you and alert you to taxation laws which may apply to your investment.
I love the property market and I love working with investors wanting to build wealth with property!
0414 828 238 or 1300 739 115