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First Homebuyer Slump Sends Budget Warning in WA
May 5, 2014
-Article courtesy REIWA-
Chief Executive of the Real Estate Institute of Western Australia, Neville Pozzi, says new data showing the continuing fall in first home buyer activity should send a budget warning to the state government.
“Given that first home buyers are dropping in numbers, it’s critical that the Treasurer doesn’t bring back stamp duty for this segment of the market,” Mr Pozzi said.
Mr Pozzi said that first home buyers were currently exempt from paying stamp duty for homes under $500,000, saving most entry-level buyers thousands of dollars and greatly helping with affordability.
“It’s very concerning, however, that Premier Barnett has indicated that the current tax break for first home buyers is under review and might be changed,” Mr Pozzi said.
“The housing market is very susceptible to cost pressures and making first homes more expensive would be a terrible blow to the market just as it’s starting to stabilise,” Mr Pozzi said.
According to the Office of State Revenue (OSR), results for the March quarter show a drop of 9 per cent in applications for the First Home Owners Grant (FHOG), some 21 per cent below the peak in June of last year.
“There has been a fall in both the applications for and payments of the FHOG for both established dwellings and new-home builds,” Mr Pozzi said.
Applications for established homes saw numbers drop by 14 per cent in the March Quarter to 2,886 dwellings, down from the peak of 4,010 applications in June last year.
Grants paid out to applicants in the same period saw a 17 per cent decline to 2,833 first home buyers, down by 27 per cent from the June 2013 peak.
“This means that grants being paid out have now fallen below the average since the FHOG was first introduced 14 years ago,” Mr Pozzi said.
Mr Pozzi said that as a proportion of the overall established market, first home buyers had dropped from 26 to 22 per cent of total turnover.
“The last thing the housing market needs right now is further cost pressure on first home buyers,” Mr Pozzi said.
According to the OSR, the median purchase price by first home buyers in the month of March was $470,000 in Perth and $350,000 in regional WA.