Ill-directed new home building first-home buyers grant scheme extended to Victoria as Wayne Swan abdicates his responsibilities
The decision by the Napthine Government to scrap its first-home owner grant for established house and apartment purchases from July 1 is simply extraordinary.
They only have to look north to NSW and Queensland to see the folly of their new scheme that offers incentives only for first home buyers who make new home acquisitions.
The Victorian treasurer Michael O'Brien says ending the first home grant for established houses brought Victoria into line with other states.
And what's been their experience?
Certainly terrific one-off headlines about the importance of job creation in the housing industry...and then quite simply first home buyers have gone awol.
The decision by first home buyers in NSW actually leaves the O'Farrell Government with a budget savings windfall given the dramatically reduced take-up of new home acquistion by first time buyers.
The NSW $7 000 first home owner grant for established properties ended on 30 September 2012. The scheme established to assist first home owners instead to purchase or build a new home offers a $15 000 grant from 1 October 2012.
NSW first home grants recipients have fallen from 2631 securing $18.77 million in grants in March 2012, to this March when there was a record low 624 recipients securing just $6.77 million to assist in their purchasing.
The same experience in Queensland which ended its $7000 basic grant scheme last October, replacing it with a $15,000 grant for new homes.
With just 217 grants recorded in the December quarter, the government website argues it will take several months before the impact of the Great Start Grant (previously known as the first home owner construction grant) can be clearly assessed, allowing for the lag between signing a contract and construction to build a home.
There had been a typical 4500 recipients in prior December quarters.
Latest Queensland State Government figures show that in the six months to March 28, there were just 805 first-home owners who received a $15,000 helping hand.
Technically the Federal Treasurer Wayne Swan has abdicated his responsibility when it comes to bringing the states into line.
Last December Property Observer's senior reporter Larry Schlesinger wrote the Federal Treasurer appeared happy to allow the state governments to break their commitment to offer “universal” first-home owner grants following the decisions by the NSW and Queensland governments to only incentivise new home purchases.
These decisions, aimed at stimulating the residential construction sector, are in clear contravention of state government commitments to provide a “universal” first home owner schemes (FHOS) to all buyers".
Speaking to Property Observer in November, Ray White chairman Brian White said the new grants were distorting the market “and not in a healthy way".
“It’s no longer a first-home buyer’s grant but a builder’s incentive,” said White who labelled it deceitful to describe it as a first-home buyer’s grant.
Of course there are also plenty of commentators, like me, who'd suggest any first home buyer's grant was most likely mis-directed creating unnecessary market distortions - and creating a gift for vendors.