The changes in the FHOG are now fully in effect in Western Australia. Under the previous terms, all first home buyers in WA were provided with a grant of $7,000 for a new home or an established home. Now, the grant is $10,000 for a new home and $3,000 for an established home.
According to Treasurer Troy Buswell, the changes in the WA FHOG are designed to boost the construction and supply industries by giving them more work and creating more jobs. Mr Buswell feels that the changes will not only provide jobs but also increase the housing supply.
Mr Buswell says that the grants will provide more incentive for first home buyers to build or buy new homes than to recycle established homes. He also sees the FHOG configuration as a way to reduce what he sees as “pressure place on the housing supply” by a growing population, while providing more jobs.
Mr Buswell predicts that as many as 800 FHOG recipients will switch from established homes to new homes every year, due to the changes.
These changes are not unique to WA; WA is one of three states, along with South Australia and Tasmania, that provide any grant money at all to those who purchase an established home.
What This Could Mean to First Home Buyers
The first and most obvious effect is exactly as Mr Buswell has envisioned—first home buyers benefit more from buying a new home than an established home. We believe that first home buyers have to be cautious when building or buying a new home because it can become easy to overextend their budgets.
Critics of the changes believe that the cuts have priced lower-end first home buyers out of the market by reducing the amount of grant money available to those buying established homes but we don’t agree with that assessment.
An increased housing supply will keep the prices on established homes from rising as fast as they would in a housing shortfall. We don’t think the changes will price out nearly as many potential first home buyers as the critics do.
Finding the Right Loan
For a home loan in Kwinana, Baldivis or Rockingham, call Smartline Mortgage Brokers Rockingham: 0408 912 244.