Changes on Horizon for Tasmanian Property Market?
Earlier last month, the Tasmanian state government made a significant change to its first home buyers grant by increasing funding to $30,000.
This figure has been doubled in order to stimulate activity and job creation in the real estate industry in the state, according to the state Premier Lara Giddings.
Another reason for the change was to provide first home buyers in Tasmania with further assistance and make the transition to homeowner easier.
"Builders have told us that there has been a lot of interest from people wanting to build their first home, but they needed more time to accumulate a deposit," said Ms Giddings.
"That is why we have taken the decision to turbo-charge the incentive for people to build their first home, effectively paying the cost of a deposit on an average new home build."
The extended grant will only be in effect until December 2014, indicating that now might be a good time to enter the real estate market in Tasmania before it changes.
How will this affect the market?
Over the September quarter, the Housing Affordability Report from the Real Estate Institute of Australia (REIA) and Adelaide Bank recorded an improvement in Tasmania.
The required proportion of income needed to meet repayments in the state fell by 1.6 per cent to sit at 24.6 per cent. This was the largest recorded drop in the country over the quarter, providing encouragement for anyone thinking of purchasing real estate in Hobart or other areas.
Throughout the quarter, the number of first home buyers dipped by 8 per cent. However, this result is not entirely negative. Over the 12 months to the end of the quarter, first home buyers increased by 12.4 per cent.
Ms Giddings noted the average cost of constructing a home in Tasmania was approximately $234,000 over 2012-13. Deducting the first home owner grant of $30,000 to bring the cost down to $204,000 could lead to a very attractive price for many new buyers in the market.
With this substantially larger grant in effect, there could be a rise in first home owner grant applications as new buyers take advantage of the current market and interest rates.
At a time where the number of first home buyers in the country has dropped, government changes such as this may help to bring first home buyer activity back to a healthier level.