Thursday, June 18, 2020

What would the RBA do if they were a first home buyer?

An interesting article came out this morning that said RBA economists were so pessimistic about the housing market in April that they suggested to the federal government to "pause" transactions on existing homes! The expectation is that house prices will drop about 7% in the coming year with a worst case scenario suggesting a drop of 15% in value also a possibility. The article from the ABC can be found here.

So coming back to the topic of buying a home, it seems that the incentives all favour building vs buying an existing home. Doesn't this hurt existing home values even more? If you were to choose between buying and building right now, what situation would one be where they decide to overlook the $45,000 incentive to build? And if you are selling in an area where there are still house and land packages available for sale, why would a buyer buy your house rather than get a $45,000 discount on building?

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