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Brendan Wong
Western Australia is the last remaining state where the First Home Owner Grant (FHOG) is applicable to both established homes and new properties.
However, WA now faces pressure to follow other states in abolishing the grant on established dwellings.
The Real Estate Institute of Western Australia (REIWA) president David Airey said the Barnett government needed to be discouraged from this.
“Most first home buyers purchase an established home, usually for reasons of affordability and to be nearer a greater variety of existing infrastructure,” he said. “Only 25 per cent of first home buyers take the option of building in the outer suburbs.
“It is disturbing that all state governments apart from WA have meddled with the way the FHOG is distributed. Now that the Commonwealth has handed over the distribution rules to the states, most have abolished the FHOG for established dwellings."
According to Mr Airey, state governments have gone down this path in an effort to save money.
“By ending the FHOG for established dwellings, state governments cut their expenditure in this area by up to 75 per cent,” he explained.
REIWA were now calling for WA treasurer Troy Buswell to maintain the policy settings in the coming August Budget.
The institute’s message follows yesterday's announcement that the New South Wales 2013/2014 Budget will not reinstate the $15,000 FHOG to existing properties, despite extending it for new properties to 1 January 2016.
The Real Estate Institute of New South Wales (REINSW) CEO Tim McKibbin told Real Estate Business it was a lost opportunity for the NSW government to reinvigorate the property market with a reduction in stamp duty rates and reinstating first home buyer incentives on existing properties.
“Unfortunately this Budget is very much a pedestrian Budget,” he said. “It’s a Budget where we are doing very little except crossing our fingers and hoping it will get better.”
Mr McKibbin said the scheme was introduced last year under the assumption that supply was being hindered by demand from first home buyers for existing property.
“The truth is, supply is hindered not by first home buyer demand but by a convoluted, inefficient planning system and a tax system that is overly dependent on property," he said.
“Rather than the new home buyers being directed towards used property, they’ve evaporated. We can see the number of first home buyer loans that are going through the banking system and our first home buyers have abandoned the market.”
According to recent data from the Australia Bureau of Statistics, the percentage of first home buyer commitments as a percentage of total owner-occupied housing finance commitments was 14.3 per cent in April this year.
“The percentage of first home buyers in the marketplace is getting very close to the record low of 12.5 per cent seen in March 2004, and is well off the all-time high of 29.5 per cent recorded in May 2009,” said Mr McKibbin.
Mr McKibbin said the government needed to recognise the critical role first home buyers played in the market and to help them by reinstating the homebuyers scheme for existing properties.
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