Ms CARNEY - 2007-05-01
In your budget, you announced an 85% median house price cap for HomeNorth Shared Equity Loans. In last Saturday’s NT News’ real estate section, there was only one house, in Moulden, a first homebuyer could purchase under your new HomeNorth scheme which you announced today. It is estimated that approximately 100 first time homebuyers are looking for a place to buy every month. Given the reality, not spin, how can your announcement today reignite the great Australian dream of home ownership?
ANSWER
Madam Speaker, I thank the Leader of the Opposition for her question. She was, again, trying to demean what is recognised by the Housing Industry Association, the Chamber of Commerce, and business generally - and will certainly be eagerly awaited by first homebuyers - in relation to HomeNorth, where it is 85% of the median. We were very strategic and needed to be very careful in considering how far we revamped HomeNorth in the marketplace with two parameters in mind. The first is, you do not want HomeNorth doing the business of the commercial world - the banks and the housing lending institutions out there in the marketplace. You have to be careful how you bump up against commercial lending practice, that is, if people can go to a bank and get a mortgage on a house, that is where they should go.
HomeNorth is set at those people on lower incomes who cannot get a deposit together and the commercial lending institutions will not help them. When we went over this with the bankers at a dinner recently, the previous cut that was set at $260 000 had been rendered as not achieving in the sense that housing prices and the market in the Northern Territory had undergone significant growth. My question to the banks was: we do not want to bump up against you in the first place and take your business - that is commercial business, not government business. The second parameter that we have to draw into consideration here is how we come up with a scheme that is effective and works for lower income earners but does not drive further an escalating market in house prices. We already had enough growth in houses; we did not want to feed that further. So, very clever work.
The bankers said: ‘You have to achieve it, because HomeNorth is important to us and it is important to us for this reason: people go into a HomeNorth home and find that they are managing the mortgage within a reasonably short time - two or three years - they then find that they want to buy the government’s equity out and own 100% of the house. Guess where they come? They come to Westpac, to National Bank Australia and to ANZ’. These were the bank managers telling me this: ‘We then get the business, your house gets paid off, HomeNorth gets paid off and HomeNorth is then able to take on another client along the way’.
I accepted that advice from the banks and went back to Treasury. Between Treasury and Housing - and there are some very good minds in both agencies - they came up with a scheme with deliberate parameters around it, set at 85% of the median, for two reasons: (1) not to escalate further growth in the housing price market that we have already seen plenty of; and (2) at 85%, ensure that we do not have to revisit the threshold every year because, as prices go up or down, the 85% remains a given percentage of the median house price in the market.
We do not pretend, and nor is the scheme intended, to give a choice of 100% of the houses or units on the market at any time for first homebuyers. We have deliberately strengthened it to provide better protection and assistance for those young families with dependants, because it is a predominantly a singles-used scheme. That is fine in itself, but we want to see young mums and dads with young kids getting into HomeNorth. Those are the parameters we came up with, and I believe it has been a marvellous fix.
I am looking forward to the next bankers dinner because I think they will be commending us and patting us on the back, like the Housing Industry Association, the Chamber of Commerce, the Territory Construction Association and the business world generally. The only source of disgruntlement I hear is from the Leader of the Opposition.
ANSWER
Madam Speaker, I thank the Leader of the Opposition for her question. She was, again, trying to demean what is recognised by the Housing Industry Association, the Chamber of Commerce, and business generally - and will certainly be eagerly awaited by first homebuyers - in relation to HomeNorth, where it is 85% of the median. We were very strategic and needed to be very careful in considering how far we revamped HomeNorth in the marketplace with two parameters in mind. The first is, you do not want HomeNorth doing the business of the commercial world - the banks and the housing lending institutions out there in the marketplace. You have to be careful how you bump up against commercial lending practice, that is, if people can go to a bank and get a mortgage on a house, that is where they should go.
HomeNorth is set at those people on lower incomes who cannot get a deposit together and the commercial lending institutions will not help them. When we went over this with the bankers at a dinner recently, the previous cut that was set at $260 000 had been rendered as not achieving in the sense that housing prices and the market in the Northern Territory had undergone significant growth. My question to the banks was: we do not want to bump up against you in the first place and take your business - that is commercial business, not government business. The second parameter that we have to draw into consideration here is how we come up with a scheme that is effective and works for lower income earners but does not drive further an escalating market in house prices. We already had enough growth in houses; we did not want to feed that further. So, very clever work.
The bankers said: ‘You have to achieve it, because HomeNorth is important to us and it is important to us for this reason: people go into a HomeNorth home and find that they are managing the mortgage within a reasonably short time - two or three years - they then find that they want to buy the government’s equity out and own 100% of the house. Guess where they come? They come to Westpac, to National Bank Australia and to ANZ’. These were the bank managers telling me this: ‘We then get the business, your house gets paid off, HomeNorth gets paid off and HomeNorth is then able to take on another client along the way’.
I accepted that advice from the banks and went back to Treasury. Between Treasury and Housing - and there are some very good minds in both agencies - they came up with a scheme with deliberate parameters around it, set at 85% of the median, for two reasons: (1) not to escalate further growth in the housing price market that we have already seen plenty of; and (2) at 85%, ensure that we do not have to revisit the threshold every year because, as prices go up or down, the 85% remains a given percentage of the median house price in the market.
We do not pretend, and nor is the scheme intended, to give a choice of 100% of the houses or units on the market at any time for first homebuyers. We have deliberately strengthened it to provide better protection and assistance for those young families with dependants, because it is a predominantly a singles-used scheme. That is fine in itself, but we want to see young mums and dads with young kids getting into HomeNorth. Those are the parameters we came up with, and I believe it has been a marvellous fix.
I am looking forward to the next bankers dinner because I think they will be commending us and patting us on the back, like the Housing Industry Association, the Chamber of Commerce, the Territory Construction Association and the business world generally. The only source of disgruntlement I hear is from the Leader of the Opposition.
Last updated: 09 Aug 2016