IMF suggestion will push first home buyers further from first rung of property ladder
By Ebony Graveur
The International Monetary Fund has suggested the issue of housing affordability can be solved by making it impossible for average Australians to buy property. While technically banning a huge portion of consumers from the housing market should reduce prices, it’s the housing market equivalent of killing every blind person in order to eradicate blindness. It’s an iconic genie move - a deliberate misinterpretation of the issue at hand with a solution that misses the point.
In a report released last week, the IMF addressed Australia’s surging housing prices, saying the situation threatened the nation’s economic stability and made it harder for people to buy a home.
Seemingly understanding the interplay between demand, supply and price, the IMF has suggested legislation be made to effectively remove a large chunk of the market - and it isn’t wealthy investors.
The IMF has suggested regulation be introduced around loan-to-value ratio caps, meaning those looking to buy will need to produce an even bigger deposit than before. It’s not going to be a problem for those with equity up their sleeves or those who can lean into the bank of mum and dad. But first home buyers struggling to put together a deposit – while wrangling the ever-rising cost of rent – will be pushed even further from that first step on the ladder.
Any drop in property prices will be a benefit only wealthy people looking to enter the market will reap.