NSW could lose 'best and brightest' as FHBs flee

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The first home buyers’ incentives for existing properties should be reinstated, says the Real Estate Institute of New South Wales (REINSW).

The industry body has called for action by the state government as a result of a decrease in property sales for first home buyers since changes were made last year to grants available.

REINSW president, Christian Payne, says first home buyers are the ‘catalyst’ for other property activity in the market.

“First home buyers are an essential link in the chain of the entire market and by excluding them it causes a great disturbance.”

From September 30, 2012, the $7,000 first home buyers’ grant was abolished for those buying existing properties. A new grant of $15,000 for first home buyers who purchased a newly built dwelling or property off the plan, up to $650,000, was introduced on October 1, 2012, with the grant decreasing to $10,000 from January 1, 2014.

“The strategy of the government to direct first home buyers towards new property is flawed because it suggests demand is the issue, when in fact supply is the issue. The inhibitors of supply are the convoluted planning system and the government’s dependency on property taxation.”

Payne says first home buyers are a unique category of property consumers and that ‘the jump they have to make from a standing start to acquiring a property’ can be the huge.

“We need to recognise they need special assistance, as typically the first home buyer is a younger person - but not always. It would be a travesty if they found it so difficult to buy a property in NSW that they were enticed to another state; NSW can’t afford to lose investment dollars. This lack of affordability or incentive means that that we could be losing the best and brightest young people."

He says REINSW wants to see an increase in affordable property.

“Therefore, the current strategy of directing first home buyers to new property has not achieved what they wanted. In fact it has adversely affected the volume of property transactions…It is imperative that the first home buyers incentives for the purchase of existing property be reintroduced.”

  • KT on 23/01/2013 1:20:21 PM

    The problem I have with the dropping of FHG for existing properties is that it forces young first home buyers into buying units OFF THE PLAN.

    There's all sorts of risks/issues in buying off the plan:

    1. The building might not be built until 18-24 months after initial deposit.

    2. Buyer cannot completely see what they're buying into until it is too late. What's the sunlight, noise, neighbours like once the unit is built. The display unit won't provide you this info.

    3. The strata fees intially are subsidised by the developer if the building is not fully sold off the plan. Buyers don't know the true trend of the strata fees until the developer has sold all their units (and usually you get a big shock in the actual increase in quarterly strata fees).

    4. The building defects and settlement cracks are not obvious until a few years after the building has been built. FHB don't know what they're buying until a few years later.

    NSw Govt shouldn't penalise a FHB (financially) for wanting buy a second hand older unit as opposed a new off the plan one.

  • Positive Broker on 21/01/2013 12:59:28 PM

    I'm with Kris, a new home on the outskirts starts around $400k. that means a fhb needs $40k plus costs or $80k plus costs to avoid LMI. Maybe be possible if you live with parents but try saving that if your paying rent! It is also forcing fhbs in to a pretty big mortgage.

  • Tim on 21/01/2013 12:18:41 PM

    The crux of the First Home Buyer issue is education not incentives. The push for First Home Buyers is incentives when what should be going on is teaching them how to be better savers so they can build up a larger deposit (even if this takes 3 to 5 years)and showing them that they should start small and then work there way up to a larger property later. I am based on Sydneys' northern beaches and have helped many first home buyers into property here. These people have saved well, bought a small unit and in many cases have come back to me years later to upgrade to a house.
    This is the message that should be going out. I am sick and tired of reading article after article saying first home buyers can't get into the market. They can and they are when they do it the right way.

  • Kris on 21/01/2013 11:46:17 AM

    I disagree with the Comments. First Home Buyers in outer West Sydney have been a large part of my Customer base. Most simply cannot afford to build/buy new homes, it is out of their price-range, so they continue to rent or stay at home with Parents. I have seen a dramatic drop in FHBs purchasing.

  • Country Broker on 21/01/2013 11:09:23 AM

    I agree with Michael , it is also a pity ( I am on the NSW / Vic ) border that the victorian Goverment does not understand that their stamp duty rebate/reduction policy incentives for FHOG is simply not working , a lot of FHOG land /construction type buyers are simply jumping over the border to NSW in places like Echuca/Moama , Albury Wodonga.

    The incentives exist to stimultae construction which results in the longer term in greater state goverment revenue .

  • Terry on 21/01/2013 10:59:03 AM

    I think the RE agents are hurting from the drop in commissions in areas that rely on the sale of existing properties only. thinga are booming in the growth areas and new sub divisions.

  • GB on 21/01/2013 10:32:46 AM

    exactly right Michael above, the policy change is spot on........RE agents are welcome to tell vendors to drop their prices if they really want to sell existing homes to FHB?

  • Michael on 21/01/2013 7:24:02 AM

    “The strategy of the government to direct first home buyers towards new property is flawed because it suggests demand is the issue, when in fact supply is the issue."

    Which is precisely why the grant is now a targeted effort to stimulate the construction of more housing. You're just upset that real estate agents typically miss out on these transactions.

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