Australian Property Industry getting desperate

[pianoman]

Did the Global Financial Crisis really happen? The Australian property industry is more desperate each day. There is a steady stream of articles written by property spruikers about the stability and ever upward-spiral of property investment. But now, they're offering entry into a draw to win $5000 just to meet with a mortgage broker. How much more obvious does it have to get before the majority realise how desperate the Aussie government and property industry have become to prop up house prices?

For our international guests, the Aussie government offers a First Home Owners Grant, $7000 if you're buying your first house. After the GFC laid the smackdown (which was caused by an inflated USA property industry), our government decided to further boost the property industry here in Australia by increasing the grant to $14000 for First Home Buyers (existing house) and $21000 (newly built house)!

[Superman]

Wow.  That's a lot of cash.  We've had minor programs like that before, but we got our big federally backed one after the housing crash.  Our's is like $8,000 though, I think.

I don't know that I'm that against propping up housing prices.  I'm not saying prices should be artificially inflated, but I'm in favor or slowing down the rapid deflation.  It's a huge industry that employs a lot of people and effects many, many industries indirectly.  I get the sentiment behind the , "they got themselves into this mess, they can get themselves out", but that ignores how many people rely on that industry thriving to thrive themselves.

It's another one of those things where I'm not saying that this is a good solution, but I do think it's the best solution.

[pianoman]

I agree with that sentiment. Economics is ridiculously cumbersome and part of us, so we have to keep her afloat. I just have a huge problem with encouraging MORE people into debt they can't afford. Isn't it kind of offensive to think that your own government enacted a plan that will enlarge the problem rather than curtail it?

In theory, if there was no money bonus, you'd save what you can and buy what you can afford. The bonus would be a lovely little - well, bonus.

However, that's not how it's worked. It's well-documented in Australia that Generation Y has a different mindset than their predecessors. We like things to come to us easily. Instead of having a neat little bonus to top off our savings, the bonus is being used as the basis of the savings. Our people just won't be able to afford the loans they're applying for (I hope to find this post in a year when our property industry is struggling).

So now they're offering cash prizes just to make an appointment with a mortgage broker. We all know that competitions are a mechanism for attracting new customers.

It just reaffirms my cynical side.

[spider]

The property industry is already struggling. That's why they're doing this.  People are being conservative with their money and are scared off investing in property due to the GFC.  However, encouraging people to re-invest will not cause the same problem.  They're not going to agree to give people sub-prime loans. You still have to sit down with a bank manager and qualify for the loan.  The bonus will help in paying off the loan (or will just push house prices up a little). 

Besides, wasn't the sub-prime loan thing about the value of the property not being sufficient for the value of the loan so that people willingly chose to default, rather than people being unable to pay the loan off?

It's well-documented in Australia that Generation Y has a different mindset than their predecessors. We like things to come to us easily.

Yeah, Generation Y are all lazy arseholes, but every other age group loves to do things the hard way and hates it when things are easy or when the government wants to give them $14K.

Please stop reading mX.

[pianoman]

OK, maybe I should say it's well-anecdoted. Don't forget, generalisations come with a grain of salt, so don't take it to heart. My point is that they're encouraging a generation bombarded by "buy now, pay later" messages to take up mortgages.

And... mX? Please.

The property industry is already struggling. That's why they're doing this.  People are being conservative with their money and are scared off investing in property due to the GFC.  However, encouraging people to re-invest will not cause the same problem.  They're not going to agree to give people sub-prime loans. You still have to sit down with a bank manager and qualify for the loan.  The bonus will help in paying off the loan (or will just push house prices up a little).

Banks are giving people loans on the basis of the grant. How does that encourage a strong market? The initial capital wasn't even earned! Generation Y bullshit aside, if you haven't worked for it, you don't have a taste of what it means to have it.

Grain of salt, spider.