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WHAT AFFECT DID THE FIRST HOME OWNERS GRANT HAVE?
At the onset of the financial correction the Australian Government immediately increased the First Home Owners Grant.
In 2001 before the introduction of GST ( goods and services tax) the government of the day introduced the first home owners grant to compensate first home buyers for the increase in building costs . After that it was reduced to A$7,000. When the financial correction occurred in 2008, the new government increased the grant to $14,000 for second hand home and $21,000 for new homes.
This had the desired affect as people now had a deposit for a home using the grant. What this caused was many of the properties at the lower end of the market were taken off the market and in some areas actually creating a shortage of homes in the $350,000 to $420,000 price range.
The extra money given to build a “new” home also was tempting for these people as they could afford to build a home that they wanted and not settle for something that wasn’t exactly right for them. This also created a shortage of land in new estates. In parts of Melbourne people were camping out to get in on a new release. However there was a downside to this grant and that it has taken a percentage of the renters out of the market. This is dependent on which area properties are in of course and will be a short term situation.
That is why the properties in high population growth areas such as The Gold Coast have not been as affected as other areas, there is still a constant stream of new people moving there and they don’t all buy immediately, they rent for 6 to 12 months to get the feel for the area before doing so. Another High growth area is Ipswich but that was more affected as many more first home owners chose that area to buy into as it was cheaper. This area has also been heavily favoured by investors and over the past few months there has been many more homes come on the market at one time than is normal.
So yes the increased first home owners grant did help thousands get into their own home but it has left a small gap in the renting market which will be short term. Property for investment should never be a short term investment and although some may have to reduce the rental amount in the short term, property will continue to be a commodity that people need.
Please feel free to contact me on email: Jenese Malone
See detailed article on house shortages in Australia here...
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