Majority of first home buyers to be worse off under changes

The REIV has said that the abolition of the $7,000 First Home Owners Grant from 1 July is a blow for majority of buyers planning to purchase a home.

REIV CEO Enzo Raimondo said that whilst first home buyers would benefit from the earlier start to the 40% stamp duty cut, those buying an existing home would be worse off.

“The majority of  first home buyers – around 70 per cent in the March quarter – prefer to choose established homes.

“Right now, first home buyers benefit from $12,691 in combined government assistance on a $450,000 home, but after 1 July that will drop by $5,103.

“Assisting first home buyers by cutting their stamp duty is the most efficient and effective form of assistance and the state government should have used its existing policy to ensure no first home buyer would be worse off under these changes.

“The stamp duty cuts committed to over two years ago should have not only been brought forward but increased to match the loss of the $7,000 grant.

“From a policy perspective, it’s time to stop tinkering with first home buyer assistance. Rather than giving a grant that is less than the stamp duty bill and then changing the rules every year, they should provide a full exemption from stamp duty for all first home buyers.

” The REIV welcomed the cessation of the special assistance for new home buyers in last year’s budget because higher levels of housing supply meant the stimulus was no longer needed.

“In the short term – between now and 30 June – the changes should lean to an influx of buyers with people seeking to take advantage of the $7,000 grant before it ends and the 40% cut to stamp duty,” Mr Raimondo concluded.

*Article courtesy of Real Estate Institute of Victoria