First-home buyer boost to end in SA

First-home buyers in South Australia will receive less assistance from the State Government from 2012, when the first home bonus grant is halved.

From July 1, 2012, the first home bonus grant, which is currently $8,000, will be cut to $4,000 and will be abolished entirely on 1 July 2013, state treasurer Jack Snelling announced in the 2011-12 State Budget.

The bonus grant was introduced on June 5, 2008.

Snelling says the bonus had the unintentional effect of driving up prices for entry-level homes.

The $7,000 first-home owner’s grant remains in place for the purchase of homes valued under $575,000

Snelling says he is confident the boost will not have a negative impact on the housing sector.

"I am confident that by then (2013) we will be seeing a fair bit of recovery in the property market.

"I think that by doing it this way we might bring a bit of activity forward,” he says.

"That money I would prefer to be spending in areas of most need. I don't think the first-home owner’s bonus does much for housing affordability,” he says.

The phasing out of the bonus grant will save the State Government $3.8 million in 2012-13 and $9.5 million in 2014-15.

The Property Council of Australia, while acknowledging the stark fiscal and political realities, expressed disappointment at property taxes not being addressed, calling them the “elephant in the room”. 

Nathan Paine, executive director of the Property Council’s South Australia division, says it looks forward to working with the State Government “in pursuit of an equitable, efficient and reliable tax system that helps us unleash the state’s pent-up economic potential”.