Let the First Home Vendors Grant die

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Last week, sev­er­al news­pa­pers ran a sto­ry in which the Labor Oppo­si­tion crit­i­cised the New South Wales Lib­er­al gov­ern­ment because the num­ber of first home buy­ers had plunged after the first home owner’s grant was end­ed for exist­ing homes. A pho­to of act­ing Oppo­si­tion leader Lin­da Bur­ney look­ing out stern­ly and sin­cere­ly accom­pa­nied the arti­cle, as she intoned in The Syd­ney Morn­ing Her­ald’s text that the Lib­er­als had aban­doned first home buy­ers:

The act­ing Oppo­si­tion Leader, Lin­da Bur­ney, said this deci­sion and the axing of stamp duty exemp­tions for first home buy­ers of exist­ing homes from Decem­ber 31, 2011, meant the New South Wales gov­ern­ment had ‘aban­doned first home buy­ers’.

‘These fig­ures clear­ly show [Pre­mier] Bar­ry O’Far­rell has locked first home buy­ers out of the prop­er­ty mar­ket with his cuts to stamp duty exemp­tions and first home buy­er bonus­es,” she said. ”The worst loan approvals for first home buy­ers in 20 years should be a wake-up call for the O’Far­rell gov­ern­ment. Their approach clear­ly isn’t work­ing’.”

What bol­locks. First home buy­ers weren’t locked out by the end­ing of the first home ven­dors’ grant: they were locked out by the impos­si­bly high prices that this grant has helped gen­er­ate over the 30 years since it was first invent­ed. And its pur­pose has nev­er been to give first home buy­ers a help­ing hand: it has always been used as a way of giv­ing the econ­o­my the eco­nom­ic equiv­a­lent of a steroid injec­tion. First home buy­ers have instead been the sac­ri­fi­cial lambs of an asset-price-infla­tion route to appar­ent nation­al pros­per­i­ty.

Click here to read the rest of this sto­ry

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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.