First-home buyer habits changing in WA

admin | 杭州桑拿
4 Dec 2018

First home owners are buying new, rather than established homes in Perth. First home owners are buying new, rather than established homes in Perth.
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First home owners are buying new, rather than established homes in Perth.

First home owners are buying new, rather than established homes in Perth.

First-home buyers are purchasing fewer established homes and building more of their own, in a change in buying habits that is increasing supply in Perth and suppressing house prices.

The change in behaviour has been linked to the state government’s adjustment of first-home owner grants last year, offering $10,000 to those purchasing or building a new home, in contrast to $3000 for those buying an established one.

The policy of turbo-charging the ­residential construction sector by increasing grants for new homes has been adopted in every state and territory in recent years, with enticements of up to $30,000 on offer to build a new home in Tasmania.

Gavin Hegney, of Perth-based valuers Hegney Property Group, said the grants had significantly changed buying behaviour a year after the policy was introduced in Western Australia.

“It used to be that first-home buyers were purchasing one new property for every four established. They have shifted for the money. Now around 40 per cent are buying new,” he said.

The new grant arrangements in WA – which came into effect on September 25, 2013 and replaced a flat $7000 grant to all first-time buyers – coincided with an economic downturn in the former boom state. As population growth slowed, so did demand for housing.

Rents eased and residential vacancy rates surpassed 4 per cent – one of the highest in the country – which has led to stagnating house prices. AMP Capital chief economist Shane Oliver said the stronger markets of Sydney and Melbourne hadn’t experienced the price stagnation of Perth because demand was still outstripping supply.

“[Sydney] spent a decade lagging the national [price growth] average. It’s now out in front for the first time in 10 years,” he said.

Sydney properties are the fastest selling in the country, with an average time on market of 27 days for houses and 26 days for units.

How state governments convince first-home owners to buy new homes

NSW

Purchasing or building a new home: $15,000* capped at contracts that do not exceed $750,000.

Established home: no grant.

Victoria

Purchasing or building a new home: up to $10,000 capped at contracts that do not exceed $750,000.

Established home: no grant.

Queensland

Purchasing or building a new home: $15,000 capped at contracts that do not exceed $750,000.

Established home: no grant.

Western Australia

Purchasing or building a new home: $10,000 capped at contracts that do not exceed $750,000 in most areas.

Established home: up to $3000.

South Australia

Purchasing or building a new home: $15,000 capped at contracts that do not exceed $575,000.**

Established homes: no grant.

Tasmania

Purchasing or building a new home: up to $30,000, until December 31.

Established home: no grant.

ACT

Purchasing, “substantially renovating” or building a new home: $12,500 capped at contracts that do not exceed $750,000.

Established home: no grant.

NT

Purchasing or building a new home: $25,000.

Established home: $12,000 to $25,000 dependent on location and caps.

Source: State and territory government policy documents

Notes:

*Reducing to $10,000 in 2016

**Possible construction grants also on offer

Jonathan Barrett is the Perth bureau chief at The Australian Financial Review

You can follow him on Twitter @barrett_ink

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