So the Baillieu government is going to double Victoria’s debt so that it can, for example, slash stamp duty for first home buyers – inadvertently making housing even more expensive. Which is great news for Victorians… who own investment properties and/or real estate agencies.
The thing is, throwing money at first home buyers – in the form of grants, or in the form of stamp duty cuts – only increases their debt, because it’s a competitive market and for every ten thousand dollars available to a buyer the bank will lend them many times more, which inflates the market and sends them deeper into debt; and because when you cut stamp duty the extra money goes to vendors, increasing the equity of existing homeowners and therefore the amount of money that banks will lend them to outbid a first homebuyer to buy that house as an investment property.
What I didn’t expect was to hear condemnation of this sort of policy from Andrew bloody Bolt, who describes it as “Taking your money to make the young lose theirs”:
Gosh, who’d have thought that a government scheme to bribe the young in to taking on big debt would lead to trouble?
…Taking money off some people to lure other people into deep debt. Brilliant skills.
Now Bolt there is talking specifically about the first home buyer grants, but the same principle applies to stamp duty cuts, which are also going to have to be paid for by other taxpayers.
Let’s hope he’s willing to specifically damn Baillieu’s appalling (and very expensive) new homeowner debt-driving policy in the same way as he damns Federal Labor’s.