There is no evidence to show that a cut to the First Home Owner Grant (FHOG) will stimulate construction and provide more homes, according to the Real Estate Institute of Western Australia (REIWA).
Under the Western Australian Budget announced last week by the Treasury, the FHOG has been adjusted from $7,000 to $4,000 for purchases of established homes, and increased from $7,000 to $10,000 for new dwellings.
REIWA president David Airey said he was disappointed by changes to the FHOG as there was no evidence from other states with similar policies to support the government’s argument.
“Building a new home is a lifestyle decision that around 30 per cent of first home buyers are attracted to. It is not a decision based on cost,” he said.
“The policy shift in the application of FHOG is unlikely to have any impact on boosting construction.”
Mr Airey said, more importantly, the building industry didn’t need any stimulus and was currently flat out meeting existing demand.
“Data from the Office of State Revenue shows that for the June quarter, first home buyer applications for new builds jumped by 36 per cent on the March quarter,” he said.
“Grant applications from first home buyers increased from 1,522 in the March quarter to 2,075 in late July, reaching their highest level since September 2009.”
Mr Airey, however, welcomed the decision by the state government to maintain the stamp duty exemption for first home buyers.
CENTURY 21 Ellenbrook principal Christian Smith told Real Estate Business the change would not have a major impact on first home buyers.
“I can see some people seeing it as a negative, but whether you have $3,000, $5,000 or $7,000, first home buyers have to have genuine savings of about five per cent, so if you don’t have your genuine savings you can’t even get your first home buyer’s grant because you won’t be able to buy anything,” he said.
“When I look at it that way, I don’t see it as a major impact at all. It’s just bonus money to assist them to get into that property."
Mr Smith said his office spent a lot of time of educating their first home buyer clients and putting them through three-month or six-month savings plans to prove they had genuine savings.