First timers grant changes cause confusion

First timers grant changes cause confusion

Posted on Friday, May 29 2015 at 11:25 AM

Calls have been made for the Western Australia Parliament to provide first homebuyers with more certainty following the recent budget announcement that the $3000 First Home Owners Grant (FHOG) will be terminated.

“We aren’t entirely thrilled that the WA Government
has seen fit to axe the $3000 FHOG for established properties,” Raine
Horne’s Larry Gallagher says.

“There’s the added complication that the FHOG
can’t be halted until the obligatory legislation passes through the WA Parliament and this is creating some confusion in the marketplace.

“Until there’s a deadline, we don’t expect much
urgency from first homebuyers, which will leave the road clear for savvy
investors to continue to cherry-pick the entry level market.

“However, once the legislation passes, whether
it’s next week or next month, we expect there will be a spike in demand for
affordable real estate in Perth and even higher prices as first homebuyers
jostle with investors in a bid to beat the FHOG deadline,” Gallagher says.

Paul
Curran, of Raine Horne Rockingham Beach, agrees that the decision to
terminate the FHOG is disappointing.

“The
first homebuyer market in Rockingham is already negligible, and the decision to
cut the $3000 grant will do little to encourage them back.

“In
addition to keeping the $3000 FHOG, I’d like to see first homebuyers under 35
given the opportunity to access their superannuation to help fund a deposit,”
Curran adds.

“The
caveat here is that the homeowners need to pay back this amount into
superannuation when they sell the property down the track.

“Accessing
superannuation to buy a house is a sensible move because paying off a mortgage
is arguably the best wealth creation tool.

“Shaving
$25,000 off your home loan via a deposit generated from superannuation is like
giving someone a four per cent interest tax-free investment, which is
competitive against the yields produced by cash and shares.

“In
addition, a quality, well-located, owner-occupied property will also generate
decent long-term capital growth, which is a capital gains tax-free return.”

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