Property experts say new state caps on the first home buyers grant will not have any affect on the strong demand from first time buyers.
Federal housing minister Tanya Plibersek announced on the weekend that the State and Federal Governments will cap the level at which first home buyers can access the grant at $750,000 in New South Wales, Western Australia and the Northern Territory, $600,000 in Victoria and $1 million in Queensland.
The caps, which come into effect from 31 December, have been announced just a few weeks after the Federal Government’s special first home buyer’s grant boost was reduced. On 1 October, the amount available under the grant fell from $14,000 to $10,500 for established homes and $21,000 to $14,000 for new homes.
From 1 January, both grants will be scaled back to $7,000.
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While the new caps will come as a surprise to some first home buyers, property experts say most first timers will be unfazed.
Harley Dale, chief economist to the Housing Industry Association, doesn’t expect first home buyers will suddenly flee the market.
“I don’t envisage much material change. The vast majority of first home buyers are in market price range which is considerably below the caps.”
Opposition housing spokesman Scott Morrison agrees with Dale that the cap will do little to effect demand and has questioned the Government’s motives.
Dale doubts the Government can expect much in the way of savings.
“If it was a cost-saving initiative I would think the caps would be considerably lower.”