Are you rushing to take advantage of the First Home Owner Boost? Or have you decided to wait and see what happens when the Boost ends on 31 December this year? Some first homebuyers believe that, together with their savings records, the Grant and the Boost have given them some extra help to get across the line. But some commentators are not so sure.
Let's hark back a few years to see the impact that the government can have on the housing market. The Liberal government introduced the First Home Owner Grant (FHOG) on 1 July, 2000 to offset the effect of the GST on housing. In the 12 months following the introduction of the $7,000 FHOG, median prices for houses in Australian capital cities rose on average by an impressive $32,000 wiping out any possible benefit. Could the same be happening today?
The Australian Bureau of Statistics released their home price index on 2 November, which showed average prices had jumped 4.2% in the three months to September 2009. The previous quarter saw a similar increase, so it seems like prices are trending up.
Does that mean you're priced out of the market and may have missed your chance of getting into your first home?
Well it depends, now that some of the heat has been taken out of the market by the recent first home buyer surge, and with the scaling back of the Boost, we may see prices drop back in the lower brackets.
The Government is also doing its bit to avoid another housing bubble. On 31 October, the Minister for Housing, Tanya Plibersek, announced that after 31 December, the states and territories will be able to set a price-cap for recipients of the First Home Owners Grant.
NSW, Victoria, Queensland, WA and NT have already said they will introduce a cap. In NSW, WA and the NT, only homes under $750,000 will receive the $7,000 grant, while the cap is set at $1 million in Queensland and $600,000 for Victoria.
No one knows what effect this will have on the first time buyers' market, which is generally under the $750k mark and certainly under $1 million.
We've borrowed the Australian Property Institute's (API) crystal ball though. The API regularly surveys valuers, fund managers, property analysts and financiers to compile their Australian Property Directions Survey. The latest issue found that 70% of respondents thought that the scaling back of the grant will have a big impact on residential properties valued under $500,000.
What do you think?