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2013 WAS THE MOST ACTIVE YEAR FOR FIRST HOME BUYERS IN WESTERN AUSTRALIA SINCE THE FEDERAL GOVERNMENT’S TEMPORARY GRANT BOOST ENDED IN 2009.

The number of First Home Owner Grants (FHOG) paid in Western Australia increased 19 per cent (to 20,441) in 2013, following the 28 per cent increase in 2012.

“Declining interest rates and tight rental conditions over the last two years made home ownership an attractive prospect for many young Western Australians,” said Urban Development Institute of Australia CEO Debra Goostrey.

Ms Goostrey said interest rate cuts reduced the mortgage costs on a $400,000 loan by more than $100 per week over the last two years, at the same time as the median rent of Perth houses increased $50 per week.

“The last time we had so many first home buyers was during 2009 when the Federal Government provided up to $14,000 on top of the existing $7,000 grant,” said Ms Goostrey.

Ms Goostrey said that strong first home buyer activity is encouraging existing home owners become more active in the market.

“Many existing home owners have been waiting several years for the right time to sell, but they have become increasingly confident that they can sell their home.”

Housing loans to existing home owners for owner-occupation increased 17.3 per cent over the year to November in Western Australia.

With investors and first home buyers both competing for dwellings in the sub-$500,000 category, many first home buyers are purchasing new rather than established dwellings.

Grants paid for new dwellings increased 39.7 per cent in 2013 compared to the 12.1 per cent increase in grants paid for established dwelling purchases.

Ms Goostrey said that an undersupply of established products under $500,000 and recent grant changes will encourage more first home buyers to purchase new rather than established in 2014.

“In the Perth market where house prices increased 9-10 per cent in 2013, new dwellings are increasingly affordable and desirable to first home buyers.

During November and December, 40 per cent of grant applications were for new dwellings, up from 31 per cent 12 months ago and 24 per cent in December 2011.

Top First Home Buyer Locations, WA (July to December, 2013)