Industry slams Queensland’s 'misleading' first home owner grant boost

'Reckless' policy doubles amount available

Industry slams Queensland’s 'misleading' first home owner grant boost


By Ryan Johnson

The Queensland government’s plan to double its First Home Owner Grant (FHOG) to $30,000 has been panned by brokers who say the incentive doesn’t address the problems in the industry.

With the scheme now available, the government insists the improved incentive would deliver cost-of-living relief, but industry critics called it “misleading”, a “headline grab”, and in need of “serious reconsideration”.

According to property expert Simon Pressley, “…this policy does nothing to address core needs and challenges of buyers, owners or renters. Nothing”.

“The policy is designed to support developers while recklessly hoping to steer gullible people into making an inferior choice for one of their most important life decisions,” said Pressley (pictured above left), director of Brisbane-based buyer’s agency Propertyology.

How could doubling the first home owner grant be a bad thing?

Part of the problem exists in the grant’s eligibility criteria.

To qualify for the grant, you must be purchasing or building a new home valued at no more than $750,000 (inclusive of land and any contract variations). The transaction must fall within one of the following categories:  

Additionally, you must be at least 18 years old, and this must be your first time owning a residential property in Australia.

The first problem with this is the property price caps need realigning in today’s market, according to Alex Gee (pictured above centre), director of Brisbane-based brokerage Kingfisher Finance Group.

“To purchase for $750,000 and below on a brand new property within 30 to40km of the Brisbane CBD is particularly difficult in 2023,” said Gee. “There will be very minimal first home buyers who can take advantage of this offering, which the available listings online will reiterate.”

Gordon MacVicar (pictured above right), director of Mortgage Choice Peregian Beach and Noosaville on the Sunshine Coast, agreed.

“There is no need to increase the grant, and this is just a headline grab due to the cost of land and construction exceeding the $750,000 limit in most metro areas, Sunshine and Gold Coast,” said MacVicar.

To Pressley, the move could even make the situation worse for first home buyers, exposing them to unnecessary risk.

“Certain people with vested interests hate me saying it, but there is decades of evidence which point to cookie-cutter new-builds being littered with potential higher risks to all buyers,” Pressley said. “These risks include:

  •  bloated sale prices, 
  •  major structural defects,
  • desperately cheap fittings that need replacement after a couple of years,
  •  construction delays, 
  •  significantly reduced rates of capital appreciation, and
  •  settlement risks.”

State government’s position: Grant promotes homeownership

From the state government’s perspective, the initiative is a way to promote homeownership.

This increase means Queenslanders will have access to the equal highest First Home Owner Grant in Australia, triple the grants available in NSW and Victoria.

Queensland Premier Annastacia Palaszczuk said she knew how much cost of living was impacting Queenslanders, especially first home buyers.

“Our government is committed to easing these pressures by delivering the largest cost of living relief package anywhere in the nation,” said Palaszczuk in a joint statement with treasurer Cameron Dick and minister for housing Meaghan Scanlon.

“I want to see homeownership rates continue to rise, which is why our government is stepping up to lend a helping hand.”

It is estimated this doubling of the grant will support around 12,000 buyers to unlock their first home by 30 June 2025, when the boost is set to expire.

The government will use funds available through the progressive coal royalties regime to give back to first home owners.

“With evidence that there is some capacity emerging in housing construction, now is the time to get more Queenslanders into their own home,” said Dick.

However, Gee said the construction industry had been “under immense pressure” over the last two years, and many clients had been shying away from building new as the risk was too great.

“We have seen significant delays in land registration, material and labour shortages, and increasing interest rates – the perfect storm for which many first home buyers do not have the patience nor additional borrowing capacity to manage,” said Gee.

Pressley was also sceptical, saying that if the government really wanted to help homebuyers, they would provide the grant “without placing handcuffs on it”.

“Modern day politicians from all parties don’t give two hoots about housing anymore.”

How can it be fair for first homebuyers?

The state government has maintained that the increase to the FHOG builds upon an already successful scheme.

The joint statement said the Palaszczuk government has supported more than 24,000 households into their first home through $365 million in grants over the last three years.

However, Gee said there had “only been a handful of clients” who had utilised the current $15k FHOG during that time.

To make it fairer for first home buyers, Pressley said the policy needed to include established properties (98% of total stock) plus the new builds (2% of total stock).

“When someone is in the market to buy a property, they should always be encouraged to make a well-informed decision by reviewing 100% of their options,” Pressley said.

“Placing a piece of cheese on a plank to remove the focus away from 98% of the options is a calculated trap. It’s a bloody reckless policy.”

Gee agreed, saying including existing properties would take pressure that had been heaped on an already volatile construction industry.

“Instead, many first home buyers have been able to utilise the separate 5% First Home Guarantee scheme," Gee said. 

“Similarly, the price caps for this scheme are proving troublesome for some at $700,000 max purchase." 

While doubling the first home buyer grant may seem great at first glance, MacVicar said it’s “almost impossible” to use in its current state.

“It sounds nice and all, but where can you buy land and build for under $750,000 in southeast Queensland? If you can, it will be for basic budget builds on small lots.”

“To encourage first home buyers to build and buy Queensland should:

  • lift the price cap for land and construction to $900,000 and
  • increase the stamp duty concession from $500,000 to match the new and regional Home Guarantee area price caps.”

What do you think of the Queensland government’s decision to double the First Home Owner Grant? Comment below.

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