GRANT CHANGES LIFT FIRST TIME BUYER INTEREST IN NEW DWELLINGS

THE CHANGES TO THE FIRST HOME OWNER GRANT HAVE ENCOURAGED A FURTHER LIFT IN FIRST HOME BUYER INTEREST IN NEW DWELLINGS, WHICH HAS ALREADY BEEN THE TREND FOR SOME TIME.

First Home Owner Grant application data showed grant applications for new dwellings lifted 17 per cent in October to 633.

The First Home Owner Grant for new dwellings increased from $7,000 to $10,000 and grant for established homes decreased to $3,000 on September 25 this year.

Urban Development Institute of Australia (WA Division) CEO Debra Goostrey said that first home buyers had been increasingly looking at new properties prior to the grant change and this trend looks set to continue.

“Due to market conditions and government policy, smaller product was not delivered in Perth for many years, creating a shortfall of affordable dwellings,” said Ms Goostrey.

“First home buyers looking to purchase for less than $500,000 in Perth are finding there are many opportunities in the new, smaller product which has been produced since the GFC.”

“In a market were established house prices in Perth increased 8.6 per cent over the year to September and residential listings have declined more than 40 per cent over the past two years, new dwellings are increasingly affordable and desirable to first home buyers.

“Prior to the grant change we had already seen a significant lift in first home buyers buying new.”

Grant applications for new dwellings this year are 52 per cent above the ten-year average compared to applications for established dwellings which are 15 per cent above the long-term average.

Ms Goostrey said that innovation in the development sector and an increased acceptance of smaller products has helped keep a lid on new dwelling prices and encouraged more first home buyers.

The average vacant block price in Perth increased 3.3 per cent over the year to September, with more than 40 per cent of blocks selling for less than $200,000, according to UDIA research of developer land sales.

“Price growth has been kept in check despite developers selling 30 per cent more lots in the September quarter compared to 12 months ago, and smaller, more creative lot designs have played a key role,” said Ms Goostrey.

“The proportion of newly subdivided blocks smaller than 320m2 has lifted from 16 to 27 per cent over the last five years.

“Residential design code changes that allow blocks as small as 100m2 will further encourage the development of affordable entry-level products in the state.

Ms Goostrey said that the proportion of grants paid for new property purchases lifted from 25 per cent in 2012 to 29 per cent so far in 2013 and this is expected to increase with Treasury predicting 800 first time buyers per annum will switch from buying established to new dwellings.

Top first home buyer locations (July to October, 2013)