Can anyone explain why the new plan is "FHOG for landlords" (Dis and Myla)
I thought that more rental stock would necessarily mean less pressure on prices for same.
Here are my predictions and logic, but I look forward to hearing others' thoughts:
All land available for development is currently being developed, as quickly as practicable.
If more land is released, there's no reason to think that it wouldn't also be developed as quickly as practicable.
Therefore no new stock will be created by the incentives. Thus the incentives will only have the effect of making new stock
relatively more attractive than old stock, increasing the prices of new stock (generally on the fringes) relative to the prices of existing stock (inner city).
Given that investors are (or should be) interested in yield, increased new stock prices will simply increase the market value of rent. Possibly (probably?) rents will be the same after the 20% discount, as they would be if there were no incentives and no discount.
The prices will become imbalanced, whereby properties on the fringes will not be that much less expensive than inner city properties, relative to the lower desirability of living there. Given that the incentives (rent discounts) cut out after 5 years, in 5 years' time the rents in the fringe areas will increase by 25%, tenants will realise it's not much cheaper to live in the artificially inflated fringe than in the inner city, and will flock to the inner city.
Thus I predict no savings in rent, no new housing stock, and a boom in inner city prices in 5 years' time.