Change to FHOGs could aid property investment owners
In order to stimulate growth in home sales and provide assistance to first home buyers, many state governments have put in place incentives for new market entrants.
However over recent months, a few of these states and territories have chosen to alter their first home owner grants. This can lead many first home buyers to place their home-buying plans on hold, as the opportunity to purchase property may become more expensive.
This, in turn, has a positive outcome for owners of investment property as prospective first home buyers continue to rent instead of buying accommodation.
Recently, Real Estate Institute of Australia President Peter Bushby stated that the level of first home buyers in the Australian property market has risen slightly to 15.1 per cent, but remains at a low level.
"The figure remains persistently low compared to the long-run average proportion of 20.1 per cent despite seven interest rate cuts since November 2011," he said in an August 7 statement.
"In large part, this drop can be attributed to State Governments, except Western Australia, withdrawing previous levels of support for first home owners buying established dwellings and it's established dwellings that 80 per cent of first home buyers prefer."
New South Wales
One of the first to see a change was the grant in New South Wales. Here, the state government offers new buyers funding of up to $15,000. However, it recently made the decision to change this to exclude new and off the plan homes only.
New homes in New South Wales – especially metropolitan areas such as Sydney – can be quite expensive, placing hurdles in the way for new home buyers to save up enough for a deposit.
The Victorian government followed suit of New South Wales, and also decided to exclude the purchase of established dwellings. The $10,000 in funding is now only available for new and off the plan homes, or the construction of a property.