Posted to Sydney Morning Herald (1/1/2011) on 1/1/2011 at 5:12 PM
Commenting on "RBA rate cut sparks commercial response"
http://www.smh.com.au/business/rba-rate-cut-sparks-commercial-response-20111101-1mte4.html
The benefits of FHOG should be tested by the Myth Buster team. The concept is nobly good, but in the real world where sellers of properties are out there to maximise profit or minimise loss, the amount of FHOG is normally costed it, that is, sold at inflated price. This is a double whammy for the buyers. Higher house price means higher stamp duty (in Victoria) and bigger loan.
Let say a property is $200000, FHOG $7500, and average stamp duty in Victoria 5% approximately. If the buyer requires borrowing 80% for the property value, and FHOG is not costed in, he needs a loan of $168000 (excluding other fees and charges). However, many house prices have already included the FHOG component since its introduction, the house price is in effect $207500, plus $10375 stamp duty. A loan of 80% of the total amount $217875 comes to $174300, or $6300 more than pre-FHOG day.
If FHOG is to increase, we can only see the house prices rising again, instead of coming down.
Commenting on "RBA rate cut sparks commercial response"
http://www.smh.com.au/business/rba-rate-cut-sparks-commercial-response-20111101-1mte4.html
The benefits of FHOG should be tested by the Myth Buster team. The concept is nobly good, but in the real world where sellers of properties are out there to maximise profit or minimise loss, the amount of FHOG is normally costed it, that is, sold at inflated price. This is a double whammy for the buyers. Higher house price means higher stamp duty (in Victoria) and bigger loan.
Let say a property is $200000, FHOG $7500, and average stamp duty in Victoria 5% approximately. If the buyer requires borrowing 80% for the property value, and FHOG is not costed in, he needs a loan of $168000 (excluding other fees and charges). However, many house prices have already included the FHOG component since its introduction, the house price is in effect $207500, plus $10375 stamp duty. A loan of 80% of the total amount $217875 comes to $174300, or $6300 more than pre-FHOG day.
If FHOG is to increase, we can only see the house prices rising again, instead of coming down.