Despite high housing prices, on 1 January 2016 parts of Australia will see a reduction in the First Home Owner Grant.
The First Home Owner Grant is a lump sum of funds first home buyers receive from the State or Territory when they purchase their first home as a brand new property. Each State & Territory has different rules, eligibility criteria and grant size.
Where is the First Home Owner Grant decreasing?
On 1 January 2016 the First Home Owner Grant for new homes will reduce in:
- ACT – from $12,500 to $10,000
- NSW – from $15,000 to $10,000
- Tasmania – from $20,000 to $10,000
These decreases follow earlier reductions in some other States including Western Australia earlier this year.
Statistics released earlier this month by the Australian Bureau of Statistics (ABS) showed first home buyer lending activity at decade lows in Australia. First Home Buyers Australia co-founder Taj Singh says it’s bizarre all these grant reductions are occurring at a time when first home buyers are struggling. “First home buyers around Australia require quite substantial sized deposits to enter the housing market. First home buyers are competing with cashed up foreigners as well as first local investors who get generous tax concessions from the federal government. Now we are seeing the reduction of one of the last measures to assist first home buyers”.
This year the NSW budget showed projections for record Stamp Duty revenue totaling more the $30 Billion over the next 4 financial years. However, despite record high property prices and deposit sizes required to enter the market, the cashed up NSW government doesn’t seem to want to help first home buyers.
Fellow co-founder Daniel Cohen said First Home Buyers Australia won’t give up the fight for first home buyer assistance. “We continue to campaign both our Federal & State governments for more first home buyer assistance. The current system is skewed towards investors and this has resulted in lower first home buyer activity according to government sources. Our governments have no idea how hard it is for first home buyers, it’s time they listened to us, the people and their own statistics”.
Currently First Home Buyers Australia are running a few petitions asking for policy reform to help first home buyers. The words from the first home buyers community across Australia have been strong. For more please visit Our Petition page.
What should first home buyers do in 2016?
“The decreasing of the First Home Owner Grant is not a positive for young people trying to get into the market” said leading NSW Buyers Agent Vicki Small, founder of Sydney Property Buyers Agents.
However Vicki Small does see hope for NSW first home buyers in 2016. “First home buyers should benefit in 2016 with the levelling off of house prices. Some experts have predicted that the west will have the largest correction which hopefully would help first home buyers in search of property. As the west is one of the largest areas where first home buyers purchase property this should be a big plus”.
Regardless of where you live and plan to buy in the future, Budgeting123 founder Fay Chan says it is very important to have realistic goals and think about your personal cash flow and what you can realistically afford now & in the future. “Having a few extra thousand dollars will certainly help, but it shouldn’t be the main impetus for you to purchase a home just because the gradual decrease in the First Home Owner’s Grant. In the bigger picture there exists other matters which you need to consider before committing to a large financial purchase”. Fay Chan says you should ask yourself “Are you aware that your current lifestyle will most likely change when you’ve got a mortgage – you may want to rethink buying lunches daily? Have you thought about having sufficient emergency savings behind you, as you are now responsible for any maintenance and additional bills that come with the home? Do you want to travel first – or have any other pressing personal financial goals you want to achieve, before being responsible for a home?”
When it comes to savings and goals, Fay Chan is very enthusiastic about living within your means. This is as important as ever heading into 2016.
This will be our last blog post before Christmas. We would like to take this opportunity to wish all our readers, supporters and followers a Merry Christmas with your loved ones.
Please note our website is in no shape or form designed to replace the need to obtain professional advice from experts such as Financial Planners. All information on our website is general & factual in nature, and should not be relied upon. In particular, in relation to this article you should check your local State or Territory government for the latest First Home Owner Grant updates. Please visit our website’s Terms & Conditions for more information.