First-home owners to the rescue

A surge in first-home owner grant inquiries on the back of stamp duty abolition and a boost to the first-home owner grant will be welcome news for a struggling housing sector, Treasurer Andrew Fraser said.

3,356 first-home owner grant applications were made in December 2008, with 2,859 grants paid in the month. This has doubled pre-stimulus August figures, when only 1,662 applications were made with 1,603 grants paid.

“One of the first and heaviest sectors hit has been the property market,” Mr Fraser said.

“That’s why we programmed in our nation-leading reforms, abolishing stamp duty for all first-home owners up to $500,000 and abolishing mortgage duty.

“The State and Federal Government acted quickly and decisively, and the stimulus is starting to take effect.

“Applications and payments of the first-home owner grant soared in the last quarter of 2008 (see table below).

“These numbers indicate gathering momentum in the first home owner segment of the market. There remains room for a further round of interest rate cuts when the Reserve Bank board meets next in February.”

In the 2008-09 State Budget, Mr Fraser announced the abolition of stamp duty for first home buyers purchasing a home up to $500,000, saving up to $9,800, along with the abolition of mortgage duty. The Federal Government announced it would boost the first-home buyer grant in October, while the Reserve Bank has cut 300 basis points off the official cash rate since September.

“The month of September, when the Bligh Government’s massive stamp duty cuts came into full effect, saw a huge spike in applications.

“Applications jumped 25% from August to September.

“And if September was the turning point, October, November and December really picked up the pace.

“2008 produced the highest numbers for the month of December since 2001.

“It’s an encouraging outcome considering the economic climate and the usual slowdown over the Christmas period.

“No-one is suggesting we’re out of the woods yet, but this is definitely an indication that the stimulus measures put in place by the State and Federal Governments are working as intended.”

Mr Fraser said the results were tempered by the latest building approvals statistics released this week.

“The increase in applications and grants paid should begin to flow through the sector to support new construction, which is traditionally the first-home owner’s market.

“The Reserve Bank’s easing of monetary policy, which will hopefully continue in the form of further cuts to the official cash rate, combined with the state Government stamp duty cuts and the Federal Government’s increase to the first-home grant should support a recovery in dwelling approvals and the property market as a whole.”

Mr Fraser said anyone yet to enter the market should strongly consider making their move.

“No stamp or mortgage duty for homes under $500,000, low interest rates and $14,000 or $21,000 grants are already proving to be very enticing for potential first home buyers.

“All of these things add up to a great deal for first-home buyers.”

*Data accurate as at 8 January 2009

Media Contact: Treasurer’s Office – 3224 5982