Now, this is essentially a transfer from everyone (taxpayers) to first home buyers and the people they are selling to. In such a situation I have to ask why? It certainly doesn’t seem fair to take money from people and give it to first home buyers and the section of the property market they are involved in … (disclaimer: I would be able to get the loan as I would be a first home buyer – just like I have an interest free student loan. This doesn’t stop me as an economist saying that they are bad policies)
The government says it is to “encourage building” – if this is the case, then why this scheme? Why not a direct subsidy to home builders.
Furthermore, why do we want to encourage building – why aren’t we doing enough building. The answer I believe is that in the current environment residential builders are credit constrained – so why doesn’ the government just offer them loans (at a MARKET rate of interest).
Bad policy idea …