NSW home buyer grants tempting 40% plus of first timers in emerging shift away from established homes

The NSW Treasurer Mike Baird says its generous handouts for first-time buyers buying new homes has succeeded, triggering the NSW Government to extend the grant aimed at boosting the state’s home building industry.

"I'm pleased to announce the extension of this successful program," Mike Baird said in his 2013 budget speech.

The $15,000 grant for new homes buyers will be extended until January 2016.

The first home owner new home grant was scheduled to be reduced to $10,000 in six months time on 1 January, 2014 when the scheme was unveiled.

The 2013 budget papers included a graph that showed the share of first home buyers securing new homes had recently hit about 48% of all NSW first home buyers. It is now running at just over 40%.

Source: Office of State Revenue and ABS Catalogue 5609.0 Housing Finance, Australia

The previous highest levels were the 30% plus peaks in 2009 and 2002 following the global financial crisis and gst introduction bonus provisions.

Despite the shift in the take-up of new houses and apartments, the overall volume of first home buyer activity remains at low levels.

First-home buyers of existing properties had previously constituted between 80% and 90% of the market segment before the government sought to redirect buyer interest to new homes in the 2012 budget.

"The turnaround in this important sector of the economy is proof that the NSW Government's policies are working," Mr Baird said.

"This budget continues to tackle the housing shortage across NSW to get more people into new and more affordable homes sooner," he said.

"The government has provided a significant boost to the housing construction industry and over the first four months of 2013 the number of grants for new homes was more than 60% higher than a year earlier," the budget papers said.

"To maintain the momentum of this initiative the government has decided that the benefits of up to $35,240 for first home buyers will be extended for a further two years," it said.

The emerging shift in buying habits will assuage some of the criticism that the government had pulled the rug from under the established market with little take-up of the new home incentives. The NSW government was the first of most state and territory governments to shift the grant emphasis towards new homes.

A first-home buyer who purchases up to a $550,000 new home will get $35,240 in assistance also paying no stamp duty.

The 2012 budget more than doubled the first home owner grant for new homes.

The $650,000 upper threshold for new home concession remains.

The government noted the $35,240 was almost $20,000 more than under the former Labor government.

"NSW now has the highest number of new homes approvals over a 12 month period since October 2005," the papers said.

"After an extended period during which residential building approvals were significantly below their long-run average levels, levels are now more than 15% above the decade average, with multi-unit approvals driving most of the improvement.

"The government's building the state package is contributing to this growth as current private sector building approvals in April 2013 is 83% above the low of 21,800 in February 2009," the papers said.