Solutions to help first-home buyers

‘Solutions’ to help first-home buyers?Recent weeks have seen a flurry of activity and proposed solutions to the fear that first home buyers will be priced out of the housing market. In Sydney house prices grew by 14.1 percent last year to hit a median of $873,786. The proposals aimed at keeping housing affordable include:Premier Mike Baird’s promise to double the target for new home sites released on government-owned land to 20,000 in the next four years.NSW Opposition Leader Luke Foley’s proposal to allow first home buyers of new and established dwellings worth up to $7,000 to pay the stamp duty in monthly payments over five years instead of up front.Treasurer Joe Hockey’s proposal to allow first home buyers to use their super to buy a property.The Abbott government’s proposal that a $5,000 fee will be payable to FIRB when foreigners buy residential properties valued under $1 million. A $10,000 application fee will apply on properties over $1 million, increasing by $10,000 for each additional $1 million in property value.The question is, which solutions will actually have a positive impact in reducing house prices? Economics editor Ross Gittins makes a valid point that the price of anything is determined by demand and supply. When demand is running ahead of supply, anything that gives people a leg up in being able to afford high house prices will only act to push prices higher. The excessive FIRB fees will jeopardise supply, exacerbate existing shortages and drive up house prices. Solutions should address increasing supply. Of the above four proposals it looks like only the land release proposal would help.With Sydney currently on track to be short 190,000 homes in the next decade, solutions should focus on making it easier for homes to be built. Overhauling the housing approvals process to deliver more homes, speeding up the rezoning process and replacing the planning system with one not littered with red tape would be a good place to start.