Out of reach
Wednesday, 16th January, 2013
By Erica Visser
The scrapping of the First Home Owner Grant in NSW has effectively locked new buyers out of the BH market, according to LJ Hooker Principal Jim Hickey.
The $7000 grant was scrapped in last year’s State Budget and officially finished in October.
The move came after some stamp duty exemptions for first time buyers were cut.
In November, according to the latest Australian Bureau of Statistics (ABS) data, NSW had the lowest number of first home buyers in 20 years.
Fewer than 1400 loans for first time buyers were approved state-wide during the month; 700 less than in October.
Mr Hickey said that the finding seemed to reflect what was happening in the local market.
“In the August to September period there was quite a number of young people looking and looking to buy something because they knew they were going to miss out after that,” he said.
“Ever since they cancelled the grant, first home buyers have virtually been locked out of the market completely.
“It also means that other owners can’t sell and can’t upgrade to a better property.”
Mr Hickey said that the scrapping of the grant had affected country areas the most.
“The Government likes to think that $7000 isn’t a lot in the city but it’s a huge amount in Broken Hill,” he said.
“We’ve had these come and go over the years but it certainly makes it a lot harder.
“You know yourself how difficult it is to save $7000. When you need a minimum of 20 per cent on an $140,000 property you need $28,000; that money’s going to make a difference.”
The O’Farrell Government defended the cuts, saying those who opted to buy or build new homes would now receive $15,000.
But Mr Hickey said that in Broken Hill building a new home was generally not an affordable option for those entering the market.
“The big problem is the cost of building a brand new house. It’s well and truly higher here than in the cities,” he said.
“In Broken Hill, it costs nearly $2000 per square metre to build a house.
“It’s much cheaper to buy an existing home.”
Mr Hickey said that he would “love to see the grant brought back in”.
He said that it was a smart way to stimulate the economy.
“With the economy being down across NSW they should be trying to stimulate it.
“It’s not like these things where they give out cash. Putting into housing would mean that once (houses) start to move the Government gets more money back.”
The State’s acting Opposition Leader, Linda Burney, yesterday accused the Government of creating the “worst environment” in recent history for new home buyers.
“Mr O’Farrell clearly has no idea about the pressures young couples and families saving for their first home are already under,” Ms Burney said.
“The Premier’s decision to dump first home buyer grants and stamp duty exemptions has been nothing short of devastating for young people trying to buy their first home.
“The O’Farrell Government has turned its back on first home buyers who are simply trying to live out the great Australian dream and buy their own home.”