For a Conservative party to push a subsidy of up to 20% of the value of a property for first time home buyers shows how bereft of policy it is. When Vic Premier Daniel Andrews raised a similar plan in March 2017 CM trashed it.
Think about it. Home prices have started to fall in major capitals because of a lack of demand thanks to astronomical prices and tapped out borrowers. This is before the Royal Commission puts the brakes on lending.
Why provide a subsidy to first home buyers toward the top of a bubble? It is not the role of the taxpayer to subsidize nor insure the downside risk in the event of the owner going into negative equity. What happened to free market economics?
What will this 20% subsidy do? If a couple go house hunting with a budget of $800,000, they will be able to shoot for a $1mn property. It might end up being the same property, pushed up by the desperate buyer thanks to the subsidy creating a false sense of security. So the reality is the taxpayer and the homeowner may end up in the red the day they move in. What a policy!!
Has ScoMo just called the top of the property market?
Apparently some automotive expert is suggesting Elon Musk will look to produce Tesla’s in Australia as he seeks to diversify production away from a Ginga-factory yet to be completed. I am wondering if the story isn’t a plant to incentivise Premier Jay Weatherill to select Tesla as the battery back up supplier of choice in his panic-fueled rush to cover up South Australia’s self-inflicted energy crisis. Perhaps Musk will promise to put a car plant in Port Augusta. To turn the argument on its head, Nissan, GM, Ford, Mitsubishi and Toyota have given up car production in Australia with good reason. It is too expensive. For Toyota, the company that has coined almost every manufacturing efficiency byword (JIT, Kanban etc) and been seconded by Porsche and Lockheed Martin (to improve F-35 production), to say they can’t do it guarantees that Musk will never consider it without massive long term subsidies. Musk is the master of squeezing a subsidy dollar. Go in front of him entering a revolving door and you’ll be behind him when you exit. Put it this way, South Australians stumping up $550m for an experiment gone wrong might be the least of their worries.