FIRST HOME BUYERS TEND TO BE USED BY MANY AS A BAROMETER FOR THE PROPERTY MARKET; HOW MANY AND HOW MUCH THEY ARE PAYING HAS BEEN THE TOPIC OF MEDIA INTEREST FOR A LONG TIME. ONE OF THE USEFUL SOURCES OF INFORMATION IS TREASURY’S ANALYSIS OF THE FIRST HOME OWNER GRANT (FHOG) WHICH WE HAVE COMBINED WITH ABS DATA TO SNAPSHOT OF WHAT HAS HAPPENED SINCE THE FHOG WAS INTRODUCED IN 2000.
In May 2000 the average full time private sector earnings was $771, which was topped up with overtime and other payments to give full time weekly earnings of $814. Government sector workers were a little better off on a total weekly income of $862.40.
The median price for a first home buyer property in WA in July 2000 was $122,000 ($125,000 in Perth and $99,000 in regional WA) which translates to 2.9 times average annual private sector wage to buy the median first home owner property in WA.
As of May 2014 the average weekly earnings were $1,647 which was topped up by 6.4 percent to give full time earnings of $1,752 for private sector workers. The public sector advantage has slipped coming in at 4.8 percent lower that the private sector. The median price of a first home owner property in WA is now $450,000 ($466,500 in Perth, $365,000 in regional areas). The average first home owner property is now 4.9 times the average annual private sector wage.
Whilst the cost of property has definitely risen, permanent overseas migration has influenced the median price property purchased by first home buyers. In simple terms, under the rules of the FHOG, you need to be a permanent resident at the time of making an application and cannot have previously owned a residential property anywhere in Australia, making some overseas migrants eligible.
According to the Department of Immigration and Citizenship between 2008/09 – 2010/11 there were 63,880 permanent migrants to Western Australia. As nearly forty percent of those permanent settlers in 2010/11 were skilled based migrants, it can be assumed that some of them would have gone on to purchase homes and were potentially eligible for the grant even though they may have previously owned a home overseas.
This doesn’t mean that competition from migrants has forced prices up, the more likely outcome is some of the permanent migrants are in a position to purchase a different product in a higher price bracket, pushing the median first home owner house price data higher.