Australia’s top economists and experts are predicting that new state changes to First Home Owner Grants (FHOG) could delay home ownership for prospective first-homeowners in Queensland and the Australian Capital Territory (ACT), according to finder.com.au.
The FHOG was dropped from $20,000 to $15,000 in QLD on 1 July 2018, while the grant will be completely abolished in ACT come 1 July 2019.
When asked how this would affect prospective homeowners living in those two states and saving for a deposit, 76% of those who answered felt it would cause a delay of three months or more.
Seven of the 17 experts (41%) felt the delay would be seven months or longer for prospective homeowners in these two states.
A stark difference of opinions among experts and economists on the topic of FHOG and concessions was highlighted in this month's survey.
Saul Eslake, of Corinna Economic Advisory Pty Ltd, said, “FHOG and stamp duty concessions are a waste of taxpayers' money, in nearly all circumstances.”
Alex Joiner, of IFM Investors, said, “FHOG grants simply push up house prices, they are [the] government's quick fix for the affordability issue without them being materially effective.”
But other experts had different views and Leanne Pilkington of Laing+Simmons, said, “Stamp duty exemptions, in lieu of the complete abolition of this tax, alleviate some of the pressure would-be first home buyers are undoubtedly experiencing in trying to accumulate a deposit.”
In Finder’s Economic Sentiment Tracker this month, positivity around housing affordability fell to just 23%, which was down from 33% last month.
Graham Cooke, insights manager at Finder, said this could be due to buyers who have bought at the market peak having difficulty repaying loans if interest rates rise or out-of-cycle rate hikes hit the market.
He added, “With the market cooling, those who bought at the peak will be under the most pressure for repayments.
“Those who bought specifically to rent could be in particular difficulty, as areas that are popular for ‘rentvesters’ tend to be in the outskirts of the city, which are the first places to drop in value and rental yield in a softening market.”
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