Warning on schemes to aid home buyers

Press, 7 September 1984, Page 2

Warning on schemes to aid home buyers

A scheme introduced by Australia's Labour Government to help people buy'

homes had the effect of ;i. pushing up prices and making it more difficult for future buyers, said a reader in sociology at the Univer- '? sity of Canterbury, Dr. q David Thorns, in Christchurch yesterday. If moves were afoot in New Zealand to follow the Australian example, the Minister of Housing, Mr Goff, should be concerned about how the moves were.

going to affect the price of houses, Dr Thorns told a public meeting organised by Christchurch Housing Network. Between 1983 and 1984 the Australian Government had assisted 55,000 home buyers at a cost of $l4l million. It had done so by introducing grants of $7OOO to families earning less than $23,400 a year. The size of the grant decreased for people on higher incomes, until it phased out at an income of $27,900, said Dr Thorns. In Australia’s latest Budget, the bottom limit for eligibility for a 'grant had been lowered to $20,000. The grants were to be paid back over five years, he said.

This was one way of getting people into their own homes, if that was what was seen as a priority. It also served to stimulate the housing industry and helped create more jobs, but

it had also pushed up prices of houses.

A study of Melbourne house prices had shown that prices had gone up 20 per. cent in the nine months after the scheme began, and the prices had risen more rapidly in the types of homes being bought by first home buyers. The study was consistent with previous research which showed that changes in housing finance led to shifts in house prices. The scheme might not have done much in the long run to ease people’s costs, said Dr Thorns.

One possible way of getting around the problem of fueling inflation was to introduce a package which would include the grant scheme but also involve controls on house price, increases, or to have a big increase in the production of low-cost housing, said Dr Thoms.