Remember when GST was first introduced in this country, back in 2000?
It was acknowledged that the extra 10% levy on goods and services would make the cost of building a new home more expensive and thereby make it harder for first home buyers to get in to the market. The federal government therefore introduced two grants:
- $7,000 to assist with buying an established home, and
- $14,000 for new homes
First home buyer activity was therefore quite high during 2000 and 2001.
Remember when the GFC hit in late 2008? The federal government again introduced housing grants, amongst other initiatives, to help stimulate our economy.
The volume of first home buyer activity has significantly declined since then.
The problem with first home buyer grants (state and federal grants) is that they ARE NOT designed to help first home buyers at all. They are designed to help Australia’s construction industry and to try and stop whinging from the likes of the HIA!
If state and federal governments genuinely wanted to help first home buyers they would come up with initiatives which still provided people with choice to buy whatever property they want. Governments have progressively removed grants payable on established homes and made them available ONLY on new dwellings.
The price of new dwellings are loaded with assorted taxes – the HIA themselves claim that about 40% of the total price of a new home are taxes.
New homes also restrict a lot of first home buyers from being able to live where they want and what they can afford. Not every first home buyer wants to live in a high density new apartment with high body corporate levies. For those looking to buy a house, not everyone wants to live on the outskirts of town where the new house-and-land packages are built – it’s not overly appealing being detached from employment nodes, social infrastructure, lifestyle choices, etc.
The longer first home buyer activity remains low the more noise we will hear from lobby groups. If governments were to ever implement a ‘genuine’ first home buyer policy it would create extra buyer activity, increased confidence, and bigger price growth for property investors.