The federal government ignored calls for an increase to the First Home Owner Grant in last week’s budget but just whether the grant requires revisiting remains a heated topic.
The Real Estate Institute of Australia (REIA) expressed large disappointment that the government failed to announce any measures to help first time buyers in its delivery of the budget.
“This is a market segment that desperately needs assistance to fund home purchase[s],” REIA president David Airey said.
The REIA has been long urging the government to bring the grant in line with current real estate prices.
When the FHOG was introduced in July 2000, the Australian quarterly weighted average median house price was $220,443, according to the REIA.
In contrast, the Australian weighted average median house price in the December 2010 quarter was $545,873.
According to a poll conducted by Smart Property Investment’s sister publication The Adviser 54.3 per cent of mortgage brokers believe the government should inject further funds into the FHOG.
Of the 359 respondents, 45.7 per cent said the government should avoid increasing the stimulus given to first home buyers.
While any increase to the FHOG would encourage first home buyers to jump on the property ladder, it seems most are split as to whether or not this would actually be a positive thing for the broader property market.
Starr Partners Real Estate chief executive officerDriscoll said any additional first home buyer incentives would ultimately have negative consequences.
“Obviously when the federal government gave extra stimulus incentives to first home buyers, it encouraged them to go out and buy property. The problem was, many average Australians weren’t financially ready. So when interest rates began to climb at the end of last year, many found themselves in trouble,” Mr Driscoll told Smart Property Investment.
“Across all the big hubs of Australia delinquencies are on the rise and that will be more prevalent as interest rates go up once or twice before the end of the year.”
As such, Mr Driscoll said the government should avoid injecting extra funds into the FHOG in order to avoid further increases in delinquencies.
And Mr Driscoll is not alone. Elizabeth Fung from Investor Capital agreed that any increase to the FHOG would not have a positive impact on the property market.
Rather, Ms Fung said the government should waive all stamp duty fees, which would help all buyers.
“When the FHOG increased, it reduced the number of other buyers entering the market, so on that basis, I don’t think the government should increase the grant,” she said.
But LJ Hooker Finance’s Bob Campbell said anything that encourages first home buyers to get onto the property ladder would be welcomed by both the real estate industry and the mortgage industry.
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