Property market welcomes Victorian first-home owner grant shake-up

The property market has continued a winning streak, with auction clearance rates remaining high as experts welcome a move by the Victorian government to lift the value of first-home owner grants.

The move comes as industry analysts have suggested the industry requires more assistance from state governments, especially as construction activity lags.

Harley Dale, chief economist at the Housing Industry Association, told SmartCompany the Victorian policy initiative is a good one, especially as it focuses on new homes instead of established dwellings.

“It’s appropriate to direct first-home buyer grants to new dwellings to boost support, and it also has a benefit for the wider economy,” he says.

The Victorian government announced this weekend the first-home owner grant will increase from $7000 to $10,000 for newly constructed homes.

The grant will only apply to newly constructed homes. Any buyers opting for established dwellings will miss out on any direct assistance.

The grants come alongside stamp duty assistance. This will apply to all first time buyers – including buyers of established homes. Buyers will receive an increase in stamp duty savings from 30% to 40% on homes valued up to $600,000.

Real Estate Institute of Victoria chief executive Enzo Raimondo told the ABC buyers usually opt for established homes, which make the changes a blow to the first home owners’ market.

“They generally want to buy close to where they work, and in Melbourne that’s inner and middle suburbs, so this is going to make it a bit more difficult for first-home buyers of established properties in Melbourne.”

However, Dale says the changes will place more activity in the construction market, which is where more work is needed.

“The Victorian government is recognising economic activity is weak in the state, and in trend terms, Victoria is running at a slower pace now than it was during the financial crisis.”

“Residential construction has the ability to impart economic activity to the rest of the state,” he says, although adds the stamp duty concessions for all buyers are welcome.

“It’s good to see some action on the housing front and I think it’s pleasing, and certainly appropriate, see some specific focus on new residential building.”

The REIV said yesterday the auctions market continued to perform well, with a 71% clearance rate off 716 auctions. Raimondo said the activity underscored the “stability” of the market.

In Sydney, Australian Property Monitors said the city recorded a clearance rate of 74%, on 219 reported auctions, up from 73% last week and 49% during the same weekend in 2012.