The New South Wales government’s $15,000 first home owner grants for newly constructed dwellings has failed to attract first home buyers as the numbers reach a 20-year low, new data shows.
The latest Australian Bureau of Statistics (ABS) loan statistics have revealed that only 1,383 loans for first home buyers were approved in November last year, the lowest figure since February 1992.
Despite this decline, the managing director of SQM Research, Louis Christopher, told Smart Property Investment this is merely a “small glitch” that will be rectified throughout the course of 2013, with more first home buyers jumping into the market in response to recent interest rate cuts.
“What the government has done is a very wise and smart decision,” he said. “This is merely a small glitch that will pass in a short space of time.”
While the number of first home buyers has fallen since the O’Farrrell government’s decision to scrap the $7,000 first home owner grant in favour of incentives to boost new construction, Mr Christopher believes the new stimulus will help the housing market in the medium to long term.
The original grant would destroy the affordability for first home buyers because it lifts the prices artificially, Mr Christopher said, adding that the increased supply of new homes will stimulate economic activity.
However, the acting opposition leader, Linda Burney, is less optimistic, criticising the O’Farrell government for having “locked first home buyers out of the property market.”
"The O'Farrell government has created the worst environment in 20 years for first home buyers trying to enter the housing market,” Ms Burney said in a statement.
"It's no surprise the property market is experiencing a slump, given the O'Farrell government has effectively locked first home buyers out.”
Despite the slump, Mr Christopher is in favour of the new government incentives, adding that he “applauds” the O’Farrell government for it.