Residential
Explore
New grants announced by the Victorian government will not help first time buyers looking to purchase homes for sale in the state.
This is according to the Real Estate Institute of Victoria (REIV), which claimed the rise in funding will actually reduce the amount of support available to people looking to get on the property ladder.
On Sunday (April 28th), the state government revealed that existing First Home Owners Grants would be increased from $7,000 to $10,000 for newly constructed dwellings from July 1 2013.
This included properties bought off the plan, buildings being used as residential premises for the first time, homes for sale developed by owner-builders and real estate completed under homebuilding contracts.
Treasurer Michael O'Brien said the move would be a boon for those looking to enter the property market, while also delivering much-needed jobs in the housing and construction sectors.
However, REIV chief executive officer (CEO) Enzo Raimondo said most first home buyers would prefer to purchase an existing property than a brand new one, with around 70 per cent of people in Melbourne choosing this option in the March quarter.
"Right now, first home buyers benefit from $12,691 in combined government assistance on a $450,000 home, but after July 1 that will drop by $5,103," he explained.
Mr Raimondo said buyers would benefit from the early introduction of further stamp duty concessions, with a 40 per cent reduction also being brought in from July 1 onwards.
"Assisting first home buyers by cutting their stamp duty is the most efficient and effective form of assistance and the state government should have used its existing policy to ensure no first home buyer would be worse off under these changes," he stated.
Despite this, the CEO argued that the concession should have been increased to match the loss buyers will experience when the $7,000 grant is retired at the end of June.
"In the short term - between now and June 30 - the changes should lead to an influx of buyers with people seeking to take advantage of the $7,000 grant before it ends and the 40 per cent cut to stamp duty," he added.
The best option for the state government would be to stop tinkering with the policy every year and just remove stamp duty for first home buyers entirely, Mr Raimondo continued.
