Extract form an article by Michael Collett
It’s easy to see why young Australians might feel like they’ll never catch up to rising house prices.
After all, a parliamentary inquiry spent almost two years looking into the affordability problem (/crisis) and came to the conclusion that there was nothing it could recommend.
But there are ideas out there. It’s just whether or not they’d a) work and b) have any chance of actually being implemented given the political firestorm that erupts every time someone so much as mentions the words “negative gearing” or “assets test”.
We’ve listed the pros and cons of some of the top suggestions, along with their likelihood of ever actually happening.
Taking mansions into account re: the pension
Did you know you can live in a multimillion dollar beachside manor and still get the age pension?
That’s because the family home is exempt from the assets test for this payment.
This means there’s an obvious incentive for retirees to have as much of their wealth tied up in their home as possible… which means they could still be living in a big five-bedroom house when a two-bedder would be more suitable.
Removing the family home exemption (or making it only apply to less pricey houses) would get rid of this market distortion and put more of these houses up for sale, which would be a good thing for the younger people who want to buy them.
It’s not grandma’s fault that the home she’s owned since forever is now worth a fortune. And the whole point of removing the exemption would be to force her to sell up and relocate, essentially.
So it’s about weighing this up against the fact that the oldies have all the houses (between 1982 and 2011, home ownership went down for every age group except over 65s).
Likelihood of this ever actually happening:
The Coalition Government says this would go against its principles. It’s not on the agenda for Labor either…(continues)
SOURCE: Michael Collett, “5 ways we could make buying a house more doable”, ABC News, 13 Feb 2017
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