Treasurer Joe Hockey announced earlier this week he would discuss the plight of first home buyers when he meets state treasurers later this month.
Real Estate Institute of Australia president Neville Sanders told Real Estate Business that first home owner grants are one of the most effective tools to help young buyers enter the market.
Mr Sanders said the federal government should take a lead role in helping create a uniform system of grants and stamp duty concessions throughout Australia, which should apply equally to new and established dwellings.
“We have strongly advocated for assistance to first home buyers to be provided in the form of stamp duty concessions,” he said.
“We believe this form of assistance does not impact market pricing and can be equally applied to new and established housing – although it would not apply to off-the-plan apartments.”
However, Domain Group senior economist Andrew Wilson said the solution to the first home buyer problem was not government grants but home-building.
Dr Wilson said grants stimulated demand, while the reason young buyers are being priced out of market was a lack of supply.
“Giving them more money will only push prices up in the long term because they will compete in the marketplace with extra cash,” he said.
Dr Wilson said first home buyer numbers are always low when housing values near the top of the cycle because prices grow faster than the savings capacity of young buyers.
“It’s just part of the cycle, and when it does correct we get more first home buyers active,” he said.
“We’re in for a long period of time – particularly in the Sydney market – of low first home buyer activity.
“Typically, that will improve markedly when prices growth starts to moderate and, typically, prices growth will start to moderate significantly when interest rates rise.”
Richardson & Wrench Elizabeth Bay director Jason Boon, who placed 21st in last year’s Top 100 Agents ranking, said he would support a federal grant scheme as long as it was properly designed.
“I believe last time there were a lot of loopholes and people took advantage of the way it was organised,” he told Real Estate Business.
“I think it has to be regulated better, because there were people using multiple family members to buy houses.”