The ACT Government’s changes to the First Home Owner Grant have the potential to damage the established property market, according to Active Property’s Mick Searle.
From September, the g will increase from $7000 to $12,500 but will only be available to buyers purchasing new homes or homes they plan to “substantially renovate”.
The previously revealed change was announced in today’s ACT Budget.
A registered salesperson with Active Property and senior mortgage consultant with The Home Loan Centre, Mr Searle believes the increase will help “clean up” an oversupply of new housing stock flooding the market, particularly in the city’s north, to the detriment of mum and dad homeowners.
“First home owners are being pushed towards new homes and there’s no incentive to purchase an established property unless they substantially renovate. Over the past 10 years of arranging finance for Canberra people I haven’t encountered any first home owners who can afford to renovate when trying to enter the property market,” said Mr Searle.
From tomorrow the income test for the Home Buyer Concession Scheme will be increased from $150,000 to $160,000 per household.
“From a first home buyer’s perspective if they spend $425,000 on a new property, normal stamp duty would be $14,487, but if they’re eligible for the stamp duty concession they will pay only $20. Add that to the increased First Home Owners Grant and that’s a substantial saving of almost $27,000… But if they want to purchase an existing home, they miss out on the concession and they’re only eligible for the $12,500 grant if they renovate.”
Today’s budget, which coincided with the Reserve Bank of Australia’s decision to keep interest rates on hold, also revealed an average 10 per cent rise in rates (or $139 per ACT household a year).