First homebuyer slump sends budget warning: WA

First homebuyer slump sends budget warning: WA

Posted on Monday, May 05 2014 at 10:13 AM

Real Estate Institute of Western Australia (REIWA) chief executive Neville Pozzi says new data showing the continued fall in first homebuyer activity should send a budget warning to the state government.

“Given that first homebuyers are dropping in numbers, it’s
critical the Treasurer doesn’t bring back stamp duty for this segment of the
market.” Pozzi said that first homebuyers were currently exempt from paying
stamp duty for homes under $500,000, saving most entry-level buyers thousands
of dollars and greatly helping with affordability.

“It’s very concerning however that Premier Barnett has
indicated the current tax break for first homebuyers is under review and might
be changed,” Pozzi said.

“The housing market is very susceptible to cost pressures
and making first homes more expensive would be a terrible blow to the market
just as it’s starting to stabilise.”

According to the Office of State Revenue (OSR), results for
the March quarter show a drop of 9 per cent in applications for the first home owners
grant (FHOG), some 21 per cent below the peak in June last year.

“There has been a fall in both the applications for, and
payments of the FHOG, for both established dwellings and new-home builds,” Pozzi

Applications for established homes saw numbers drop by 14
per cent in the March quarter to 2886 dwellings, down from the peak of 4010
applications in June last year.

Grants paid out to applicants in the same period saw a17 per
cent decline to 2833 first homebuyers, down by 27 per cent from the June 2013

“This means that grants being paid out have now fallen below
the average since the FHOG was first introduced 14 years ago,” Pozzi said.

As a proportion of the overall established market, first
homebuyers had dropped from 26 to 22 per cent of total turnover.

“The last thing the housing market needs right now is
further cost pressure on first home buyers,” Pozzi said.

According to the OSR, the median purchase price by first
homebuyers in the month of March was $470,000 in Perth and $350,000 in regional

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