More money avaliable for the poor

[cantthinkofanickname]

The govt has increased the loan amount avaliable to first home buyersfrom 150k to 200k. Do i smell a small price increase in housing as more will be out looking therefore pushing prises higher. Dumb move by the govt good for us

[Stevegoodey]

Good for us as in it will push the prices up?

Hmmm Isn't that the opposite of what the govt was intending?

Well another interventionist government makes a blunder what a surprise.


Steve

[Josko]

Won't have any effect on Auckland, cant buy much for 200k, maybe some city apartments.

[aka_G]

it's good for poor people but they need to choose the right area then.

[SuperDad]

Hi CTOANN.

Contrary to the title of your thread, these loans are not "money for the poor". I've just checked and, if it weren't for the fact that we own property, my wife and I would be eligible for one of these loans. for two people, the income threshold is $85000!!!

The loans target those who have a good income, but who have not saved a deposit (up to $200,000), or who have saved or been gifted a 5% deposit (up to $280,000).

I'm not sure that the government's intention is to keep prices down (at least not with these loans), so a rise in prices as a result of the Welcome Home Loans would not be contrary to their intention. I think that the loans are a recognition of the fact that house prices are rising at such a rate that they are outstripping people's ability to save for a deposit. This is coupled with the govt's belief that home ownership is a social good.

Paul.

[Joma]

Servicing 200K is not for the poor or low income. Govt need to completely rethink this.

[McDuck]

The govt has increased the loan amount avaliable to first home buyersfrom 150k to 200k. Do i smell a small price increase in housing as more will be out looking therefore pushing prises higher. Dumb move by the govt good for us

Interesting take.

The general concept is good.

More money…more buyers with money…more demand for housing.
With a fixed supply, the price should go up.

Now look at your concept again.
Quantify it.
Is there actually more money? …if so how much?
Are all the factors actually as you perceive them?
Will one assumption always lead to the next?

What you are looking for is the relative equilibrium points and the overall effect on the quantity you are interested in…in this case price.

There’s more to it than that…but you do have the general grasp of it.

[McDuck]

Well another interventionist government makes a blunder what a surprise.Steve

Steve…what you said is interesting…
Are you saying that you want the government to keep out of all business affairs?

Have you seen a place or a time when this sort of free market balancing could work?

[Dean@Massiveaction]

Yes another Labour attempt to ingrain socialsim that will actually only drive house prices up. More capital growth, dont'cha hate that!! Thanks Helen.

Sadly this nonsense will do nothing to help those who really need it as the people who most need help need a financial education and budgeting help. If the government stopped all the loan sharks operating in poor socio economic areas to force people to get real help........Why do I expect intelligent responses to social issues from the current government??
At least in Fiji theey admit they don't know what to do instead of coming up with nonsense schemes like this.

[McDuck]

Poomba.

Now I’m really curious about the propaganda people have latched on to from either side.

So you see the offering of a financial housing loan as a Socialist type activity.
The alternative to a loan being the gifting of the housing.
The result of a loan being the private ownership of the property.

And it doesn’t at all seem incongruous to you?

[drelly]

One thing that occurred to me is that anyone getting this subsidy will be able to buy a home that is far more expensive than they otherwise would be able to afford... pushing prices up. It's hard to believe that the people who devised this plan couldn't forsee this. Perhaps it's a case of blindly following socialist ideals?

[Stevegoodey]

Steve…what you said is interesting…
Are you saying that you want the government to keep out of all business affairs?

Have you seen a place or a time when this sort of free market balancing could work?

All I'm saying is that these types of state controls on the free flow of the market never seem to work.

Look at Australias first home buyer grant of $11,000.
It simply raised the price of all entry level homes by $11,000.

Same story all over the world when a state attempts to control peoples monetary habits they usually succeed in creating the opposite effect than the one they were attempting.

Just my humble opinion.

I agree with pooomba the problems not how much houses cost or how much the average wage is.
The proplem is with what people are doing with their money.

New Zealanders would rather rent a flash apartment than own their own first home if it is less than their dream home.

[Dean@Massiveaction]

Ditto Steve and Drelly. The end result is not going to be home ownership McDuck. The end result is more debt and more people losing their money to mortgagee sales. The only winners are people like us who watch prices rise and get to buy the bargains when the scheme fails. Without educating people financially making money easier to get is no favour.

[Josko]

Is the logic more orientated around the loan being for first home owners without a deposit that are currently renting, so if they shift from renting to buying there will be less renters, less renters lower yeilds, less investment in property.

From looking at the finacial institutions that are supporting the scheme, this looks mainly to be geared towards regional areas.

CBS Canterbury
Credit Union Baywide
Credit Union Otago
Credit Union Waikato
Kiwibank
Nelson Building Society
Southland Building Society
Southland Credit Union
TSB Bank
Also it seems that there is an attempt to provide guidance with the scheme:

To find out more information on preparing to own a home check out:

• Housing New Zealand Corporation’s
  Guide to Home Ownership

• www.sorted.org.nz

• www.familybudgeting.org.nz

How much more can you do.

[McDuck]

All I'm saying is that these types of state controls on the free flow of the market never seem to work.

I'm still not clear where you are coming from.

When you say “these type of controls”...do you mean any type of government intervention...like say for example instructing the reserve bank to try and keep inflation under three percent?

I’m not trying to back you into a corner…just curious as to how people group ideas.