Puzzle Finance Blog

First-home buyers told to build or miss out on first-home buyers grant

QUEENSLANDERS are worried a new first-home owners scheme for new builds will increase already-inflated house prices.

The Courier-Mail  has revealed the Newman Government will replace the existing $7000 first-home buyers grant with a $15,000 handout to first-time buyers purchasing newly-constructed properties.

First-time buyers will be given until October 11 to sign contracts before the permanent demise of the $7000 grant, which was originally introduced by former prime minister John Howard to offset the cost of the GST.

The $15,000 grant will be available from September 12 for properties valued at up to $750,000.

Treasurer Tim Nicholls said the grant was a better-targeted response to previous attempts to stimulate the construction sector.

"The grant does not have an expiry date, which means it will give confidence to the construction and property sectors over the long term," he said. "The First Home Owner Construction Grant is yet another component of our positive plan for this vital sector of the economy, which creates jobs for Queenslanders."

But not everyone is convinced the new deal will be a win for people trying to break into the property market, with Couriermail.com.au readers worried the changes will actually lead to rising property prices.

A cynical 'Bro of BrokeValley' wrote: "Yeah...of course up go the price of new houses by $15,000."

While 'Scott of Brisbane' questioned who would really benefit from the scheme.

"I'm sure this will be great for the construction industry but as soon as someone buys a brand new home it will be instantly devalued by $15,000 because they can't sell it as new anymore. The construction industry are the winners here not home buyers. I don't think this idea has been thought out very well," he said. 

Housing Industry Association executive director Warwick Temby said there was no doubt the scheme was a win for the state's struggling home building industry.

"The immediate introduction of the grant from tomorrow will also mean that there will be no hiatus for the industry.  Buyers will be able to act straight away rather than wait for legislation to change,'' he said.

The decision to eliminate the $7000 grant, which cost taxpayers about $117 million a year, is also likely to hand the Government significant savings.

The former Bligh government attempted a similar construction sector stimulus with $10,000 for all buyers, but it did little to attract buyers in the depressed market.

However, the industry argues the so-called building boost had little chance of success while the $7000 grant for existing homes continued.

"All (the $7000 grant) served to do was increase the value of established property by about that same measure," UDIA president Matthew Wallace said.

The move comes as the first-home sector of the market has shown signs of improvement. Office of State Revenue figures show 5413 grants were handed out in the June quarter, compared with 4005 in the corresponding quarter in 2011.

Posted by Steven Wardill - The Courier Mail on 10th September, 2012 | Comments | Trackbacks

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