Some comments from Ross Greenwood earlier this year:

Right now the Federal Government is at pains to tell everyone – including us the mug-punters to the International Monetary Fund that it will not exceed its own, self-imposed, borrowing limits.  

How much? $200 billion. And here’s a worry. If you work in a bank’s money market operation; or if you are a politician; the millions turn into billions and it rolls off the tip of the tongue a bit too easily.    

But every dollar that is borrowed, some time, has to be repaid. By you, by me and by the rest of the country.     

Just after 5 o’clock tonight I did a bit of maths for Jason Morrison.  But it’s so staggering its worth repeating now. First though … here’s what Chairman Rudd has been saying about – what he calls – these temporary borrowings. Remember those words … temporary deficit but the total Government debt could end up around $200 billion.    

So here’s a very basic calculation … I used a home loan calculator to work it out … it’s that simple.

$200 billion is $200,000 million. The current 10 year Government bond rate is 4.67 per cent. I worked the loan out over a period of 20 years.   

Now here’s where it gets scary … really scary.   

The repayments on $200 billion come to more than one and a quarter billion dollars – every month – for 20 years. It works out we as taxpayers – will be repaying $15.4 billion in interest and principal every year …$733 for every man woman and child – every year.   

The total interest bill over the 20 years is – get this – $108 billion.    

And remember, this is a Government that just 18 months ago had NO debt. NO debt. In fact it had enough money to create the Future Fund to pay the future liabilities of public servants’ superannuation … and it had enough to stick $20 billion into the Building Australia Fund last year….

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Developers in Victoria are concerned that demand for new property up until 30 June 09 may drop as more first home buyers wait for the new grants to be available from 1st July 2009. Currently new home buyers will recieve a total of $26,000, however from the 1st July this is going to increase to $32,000. The 6 week gap of subdued activity may force developers to offer their own “subsidies”, which is exactly what Devine Property has done. They weren’t going to wait around for the next 6 weeks for the Governments announcmenet to take effect. Instead they have taken the innititave to offer the incentives immiedietly out of their own profits ensuring that there wouldnt be a drop off in demand for their developments.

Luke Hartman, Devine’s Victorian General Manager has said that the current times have been the best they have seen for first home buyers. Devine is targeting buyers aged 25 to 39 who had double incomes. With a 50% increase in sales since October 08 when the boosted grant was immplemented, it looks like Devine are oncourse for another successful year.

In April 09, Victoria saw almost 4,500 first home buyers come into the market with about 75% of those looking to buy established property. Victoria has the most generous boosted grant scheme compared to the other states.

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“First home buyers who qualify for the First Home Owner Grant (the grant) may also be eligible for an additional payment known as the First Home Bonus. To be eligible to receive the bonus, the value of the property must not exceed $500,000. ” (SRO)

So from the 1st July 2009 through to the 30 June 2010, the Victorian State Government will provide an additional $2,000 for FHB of established property and $11,000 for FHB of new homes. This is on top of the Federal Government First Home Buyers Grants.

In addition to the above, the state Government is also encouraging First Home Buyers to purchase in regional Victoria. There is an additional $4,500 on offer for those that buy in Regoinal Victoria. Here is a link of all the municipalities that comply with the additional Regional Boost: http://www.sro.vic.gov.au/sro/srowebsite.nsf/taxes_firsthome_bonus_regional.htm 

This is a very proactive step by the Victorian State Government and really encourages more people to buy, it helps spread the interest to new growth corridors and encourage developers to continue to bring new product to the market. All in all a great result for the residents of Victoria.

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It looks like the boosted First Home Owners Government Grant has done more for the Australian economy than anyone expected with a huge 42% increase in the number of First Home Buyers in NSW according to BIS Shrapnel. Although recent reports indicate that property prices have fallen, futher research tells us that a number of suburbs in Sydney have actually increased in value over the last 12 months. The more affordable property in Sydney property market is definetly on the way up with a rush from FHB. The upper end of town is feeling the effects of the economic down turn the worst with suburbs like Double Bay and Mosman falling more than 8% over the last 12 months and expected to fall further. Once again these drops are attributed to the higher priced properties in the area which may have been selling at $3.5m 12 months ago but in some instances the same proeprties are now worth a few hundred thousand dollars less. Properties in these regions that are sub $1,000,000 are still selling very well. After walking into 2 properties in Rose Bay over the weekend, both agents indicated a stong demand for properties at this price range with both properties having over 30 groups through on the weekend open house.

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This was the title of a press release that we sent out in early February. the point of the press release was to advise that the market was going to go into shock when it came to the number of first home buyers hitting the market with the anticipated end date of the boosted First Home owners grant. Needless to say, we were spot on and probably the first to predict it, although a fairly obvious predicition. We had coverage on Channel 9 news and in a number of local papers such as the North Shore Times in Sydney.

We predicited this was going to occur based on the grant expiring, rent becoming more expensive then mortgage repayments in some areas and very low interet rates. Our predicitons were confirmed with agents and developers over the last 2 months stating that anything under $600,000 was flying out the door. The rush was on from First home buyers to secure a property before the grant expired. Further to this the banks have been making it difficult for some as lending criteria has changed and the huge demand for new loan applications has slowed banks cycles rates dramtically.

Now we will wait to see how the Government reacts to what has occured since October 08 and what adjustments if any they will make to the boosted FHBG.

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An overhaul of consumer credit rules will make it easier for people who lose their job to envoke a “hardship” clause to seek relief from demands to meet mortgage and other loan replayments. The threshold for people to qualify for financial hardship will be increased from $312,400 to $500,000.

The aim by the government is to help people to keep their home even if they have lost their job. The four main banks have signed up to the scheme. This is a great step forward by the government and the banks so long as it is not to dificult for those that are in hardship to secure the payment break tht they may require.

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