WA First Home Owners Grant Takes Effect in October

The Western Australian government has announced that the recently passed changes to the first home owners grant in the state will now be taking effect in October this year instead of September.

This is great news for anyone wishing to purchase real estate in Perth, as there will be an extra few weeks to get applications in early before the changes are implemented.

In early August, the state government announced in its 2013-14 budget that it will be boosting the first home owners grant from $7,000 to $10,000 for those purchasing or constructing brand new homes.

Funding for established dwellings will be reduced from $7,000 to $3,000.

These changes have garnered mixed feedback from industry professionals, as once it takes effect, first time buyers will not receive as much funding for purchases of established dwellings.

According to the Real Estate Institute of Western Australia (REIWA), 70 per cent of first home buyers opt to buy established homes rather than buy or build new ones.

The government has implemented these changes in order to boost the housing construction sector in the state, however REIWA President David Airey stated that this will not help.

"Building a new home is a lifestyle decision that around 30 per cent of first home buyers are attracted to. It is not a decision based on cost," Mr Airey said in an August 8 statement.

"The policy shift in the application of FHOG is unlikely to have any impact on boosting construction."

Last week (September 13), the amendments to the grant were finally passed through the Legislative Assembly.

"These changes were intended to take effect from September 15 but were subject to the passage of required legislative amendments," said Treasurer Troy Buswell in a September 13 statement.

"The Bill covering these changes passed the Legislative Assembly on Wednesday and is expected to be considered by the Legislative Council next week and receive Royal Assent at the latest, by the end of October 2013."

This means that the existing first home owners grant will continue at $7,000 for both new and established dwellings until the amending legislation has achieved Royal Assent.

According to the Urban Development Institute of Australia's Western Australia division, first home buyers in Perth spent an average of $450,000 on their first purchases during July. This is a $32,000 increase from 12 months ago.

Using this figure, first home buyers can use funding of $7,000 for established homes for sale until October to bring this price down to $443,000, or $440,000 for a new home once the changes are enforced.