This post might sound counter intuitive, but bear with me. Nevertheless, I admit that I could be wrong. Pure speculation from an old Baby Boomer and retired estate agent that may be worth further discussion and enlightened debate.
Towit: It has long been recognized that substantial, government handouts have the effect of inflating the price of commodities and services where they apply. For example, the home insulation subsidy of a few years back almost doubled the cost of same, given the grant was ridiculously excessive. Likewise the grants for school buildings. Transport subsidies for drought effected farmers inflated the price hay transport. And, more to the point, stamp duty wavers for first home buyers and grants have only served to drive up the price of entry level housing/units.
So here's the rub. I believe the government, with respect to the RE example, have got it backwards. Conversely, it is my contention that the stamp duty relief should apply to the Baby Boomers that wish to down-size (I'm only talking principal places of residence), thus freeing up larger family size homes for younger buyers. And here's why. Contrary to popular belief the majority of Baby Boomers are cash poor. They have worked all their lives to pay off their mortgage, but are surviving on the pension. They can't down-size due to two factors. First they can't afford the stamp duty to down-size. And second, any small surplus they might derive from the sale would compromise their meager pension. So in a sense they are trapped. Should the SD scenario be reversed, from a market perspective two dynamics may eventuate. First, it would greatly increase the supply of inner city larger family homes for younger buyers, and second, with the removal of SD relief and grants for first home buyers it would/may take some of the excessive heat from the entry level sector.
I'm thinking out-of-the-box here, and I admit that there are holes in the theory, which would have to be addressed, the dynamic is complicated. And yes, I'm aware that there is some tax relief to encourage BBs to down-size, but that is aimed at high-end, self funded retirees, which only encapsulates a small percentage of the market.
I look forward to your intelligent responses. And keep it nice, folks. It's just an idea for brain storming purposes.
