Axed grant not all gloom
The State Government’s decision to abolish the First Home Owner Grant for existing homes may stimulate the local construction industry, according to local industry experts.
Treasurer Mike Nahan announced in the Budget the Government was slashing the $3000 grant.
This decision comes two years after it was reduced from $7000.
The $10,000 grant for first homebuyers who build a new home remains unchanged.
REIWA Geraldton branch chairman Phil Sorgiovanni said it was not the responsibility of taxpayers to “foot the bill” for first homebuyers.
“There are many people before who have had no assistance,” he said.
“I certainly see why the Government has gone down this path in trying to stimulate other areas of the economy, in this case the building industry.”
He said as supply built — as a consequence of the construction of new homes — the listing prices of homes would drop, creating a more affordable housing market, and would reduce the “considerable” supply of vacant land.
“I don’t think it takes first homebuyers out of the market, it may just lead them in a different direction,” he said.
“In my opinion, the FHOG can sometimes lead individuals to purchase a property for more just to get the grant, but in reality, the purchase cost can sometimes outweigh the benefit.
“My advice to first homebuyers is to shop around for value — your first home does not need to be brand new or with all the ‘bells and whistles’.”
He said there was good value in the Geraldton real estate market and the potential savings in the long-term would be far more beneficial than a one-off payment.
Ray White principal Ian Wheatland said the State Government had left itself with no choice but to cut the FHOG because of the state of its finances.
He said the decision was unfortunate for this generation of first homebuyers, but it would not have a big impact on the local real estate market.
“People can still build new homes and be eligible for the FHOG,” he said.
“It will create employment opportunities in the construction industry.”
The State Government announced it would be retaining the stamp duty exemption for homes under $430,000, however land taxes are set to increase, generating $826 million for the Government over the next four years.
Mr Sorgiovanni said stamp duty had a greater impact across a wider section of the real estate market and the Government’s decision to retain the exemption was “very pleasing”.
He said nobody liked tax increases, but people were more tolerable of them if they saw tangible benefits in the sector through the provision of grants or reductions in stamp duty.
“Currently, I’m not sure where these funds are intended for use, but what we do know is that it will more than likely add further pressure to those already facing tough times, especially as some of these increases are passed on or reflected in rental increases,” he said.
