First home buyers flock to grant - Real Estate - News | City South News

ASK any real estate agent which sector of the property market is doing well right now, and they’re likely to nominate the lower price brackets that typically appeal to first home buyers .

A beefed up First Home Owner Grant (FHOG) is certainly seeing first timers flock back to the market, but it begs the question - are today’s first home buyers paying an inflated price just to get an enlarged hand out?

The FHOG, normally set at $7000, has always been a welcome helping hand for first home buyers. However late last year, as part of the government’s economic stimulus package, the FHOG was boosted to $14,000 for the purchase of an established property, or $21,000 if you opt to build a new home.
As you can imagine, first home buyers have wasted no time taking advantage of the enlarged grant, especially when it comes hand in hand with significantly lower interest rates.

Australian Bureau of Statistics (ABS) figures show first home buyers currently account for around 26.5 per cent of all new home loans - the biggest proportion since the ABS started keeping records in 1991. But there’s a catch. The increased FHOG ends on June 30, 2009. There is a possibility that the boost could be extended as part of the May federal budget, but that’s an unknown. At this stage, from July 1 the FHOG reverts back to a flat $7000.

This is seeing a rush of first timers racing against the clock to sign a purchase contract before 30 June. Some industry pundits are saying this is pushing up property prices in the low end of the market while values continue to languish in the more expensive price brackets. The danger is that unless the boost to the FHOG is extended, prices in the lower end of the market could slump after 1 July, when the FHOG drops back to $7000.

For first timers buying at present, that could mean paying more than they need to - perhaps an extra $10,000, $20,000 or even more, just to secure an extra $7000 in government handouts.While this scenario is a possibility, the more generous FHOG is hard to go past.

Sure, it may be inflating prices but it’s allowing many young Australians to get their foot in the property market, something that may not have been possible without the extra cash of a more generous FHOG. That said, a property purchase should never be rushed. The old maxim, "act in haste, repent at leisure" definitely applies to buying a home.

It’s always worth taking the time to be sure a property is right for you and that the price represents good value. Your home is a long term investment and buying in an area with good growth potential will help you make money over time. Doing your homework here is arguably more important than rushing into a purchase decision in a bid to benefit from the government’s extra helping hand.

First home buyers flock to grant - Real Estate - News | City South News

First Home Loan Specialists Comment

This article confirms our belief that First Home Buyers need to understand the whole buying process. Part of this buying process is selecting the right house at the right price to suit your needs. But, I still consider that now is the best time for First Home Buyers to get into the market.

Greg Brierley
Principal

T: 1300 884 809
F: 02 6241 2545
E: greg@firsthomeloanspecialist.com.au
W: www.firsthomeloanspecialist.com.au

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