First Home Owners Grant Stimulates Demand, HIA Says
In October, the Federal Government tripled the First Home Owner’s Grant (FHOG) for purchases of new housing, to $21,000.
Added together with the Victorian Government’s grant, first home buyers building a new home in regional Victoria can access up to $29,000 and those in metropolitan Victoria receive $26,000.
Additionally, a large number of builders are adding incentives, which mean in some cases first home buyers purchasing new homes can access up to $42,000.
HIA’s research, based on a sample survey of Victoria’s Top 20 builders, found the level of inquiries (includes display home traffic and online inquiries) doubled in October and November.
While some builders reported this was yet to translate into new home sales, those predominantly servicing the first home buyer market said new home sales had returned to pre-financial crisis levels, and were up between 30 and 50 per cent in October and the first few weeks of November.
“Clearly this shows that the Federal Government’s decision to triple the grant for new home purchases is starting to rejuvenate demand for new housing,” said Acting Victorian Executive Director Robert Harding.
Mr Harding said provided there are not severe job losses, the increased grant and further interest rate cuts, should help stimulate business activity and boost much-needed housing supply.
“Some of our members are saying while inquiries are up by 50 per cent, first home buyers have still been reluctant to sign contracts due to job insecurity,” Mr Harding said. “We are hopeful that the Reserve Bank will continue to cut interest rates in coming months, and that this will help revive consumer confidence.”
“We would also urge the major commercial banks to pass on any future rate cuts in full,” Mr Harding said.
HIA expects the increased grant will provide a 15,000 boost in the production of new dwellings nationally. When the FHOG was doubled for new house purchases in 2001 the number of new dwellings built nationally increased by 3,000 per month over a nine month period.
