My mate and I racked our brains trying to figure out how to get the FHBG when we started our investment journey.
I just went ahead and purchased an IP which disqualified me at the time. He was paralysed by it for 2 years.
When we finally had an opportunity to use it, we found houses were $20/30k more expensive at the lower end of the market. Because the grant allowed you to essentially borrow more, people just jacked up their price.
Crazy what people would pay (and do) to 'save' the grant money.
When I purchased my first property it was an OTP with the FHOG. It let me get into the market for much less than it would have cost otherwise. In hindsight the OTP has cost me a lot of headaches and extra expenses in legal battles with the developer BUT it was a start and the property has grown exceptionally well and gives back 6% net yield.
It's really a case of weighing up one's situation. Established property is superior in almost every way so it's the best option but if you can't afford to get into a reasonable property in a reasonable area then OTP + FHOG might be the best scenario.
Words of caution though:
1. Check the developer's track record
2. Don't buy in large developments / suburbs that are purely OTP
3. Do a lot of homework. The picture they paint with expected rental returns, growth and the like is often bogus.