First Home Owners Boost has 30 days to go

Hey everyone,

As all of you know from October 1 the First Home Owners boost will be halved, to $3500 for established homes and $7000 for new homes. I just wanted to gather some opinions on how you think this will affect the property market. I have recently read and posted a lot of reports saying property sales are through the roof. However, with the first home owners grant coming to an end coupled with the fear of increased interest rates, will this slow the property market down???




Daniel Kanoon
 
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Hey everyone,

As all of you know from October 1 the First Home Owners boost will be halved, to $3500 for established homes and $7000 for new homes. I just wanted to gather some opinions on how you think this will affect the property market. I have recently read and posted a lot of reports saying property sales are through the roof. However, with the first home owners grant coming to an end coupled with the fear of increased interest rates, will this slow the property market down???

A FHB couple with two reasonable incomes could be buying up to around the 600k mark.

I'm not sure whether $3500-$7000 less grant money is going to slow this market much.

Maybe for cheaper new property in outer suburb housing estates?

Also, top end property in Melb is moving notably... average FHB's aren't involved in this market and the grant shouldn't have any notable effect here I would think.

The only thing I see slowing growth down (apart from an IR rise) is increased supply, which is a distinct possibility as we approach the spring selling season.

But it's also possible that investor demand will be sufficient enough to keep prices surging upwards.
 
Hey everyone,
Hey Daniel

As all of you know from October 1 the First Home Owners boost will be halved, to $3500 for established homes and $7000 for new homes.
Yes, the boost bit is being tapered off.

I just wanted to gather some opinions on how you think this will affect the property market.
Well you came to the right place. We are full of opinions here :D

I have recently read and posted a lot of reports saying property sales are through the roof.
Yes they are. I see it first hand every day and every week-end at the Opens I go to. Many times, properties are selling over the asking price within hours of an Open. IF they make it that far. We have been buying during the week and tying up purchases by Friday....because if we don't, by Saturday its gone. Auction clearance rates are at those you see during boom times 70, 80 & 90%. Another thing you see is valuations that come in low because valuers are working off 3 month old sales data.

However, with the first home owners grant coming to an end
I think you mean boost. The FHO grant stays.

coupled with the fear of increased interest rates, will this slow the property market down???
No, I don't think so for the following reasons:
1. FHBs are back to their 'normal' levels of approx 20% of the market and yet prices continue to rise
2. I have seen a steady increase of upgraders back in the market. Some months ago there were very few upgraders & some investors were dumping stock onto the market that was purchased by FHBs. But there are lots of upgraders who have sold to FHBs, now supporting the middle and higher end of the market
3. Investors are making a re-entrance into the market. Recently published surveys have 3 out of 4 investors who intend to purchase, waiting for the boost to expire.
4. IR rises are seeming to be having the effect of bringing forward investment purchases. Lenders' serviceability calcs are done on present IR + 2% - so better to get more funds now while SVRs are at their low point seems to be a theme I'm hearing.
5. People who were held back by fear because of media reports or people like Prof. Keen, now see the folly of expectations of 40% falls. They are now facing the reality of paying 10% more than they could have paid, 6+ months ago.
6. While-ever the share market is volatile people retreat to the relative safety of bricks & mortar.
7. Unemployment is not expected to get to the levels predicted. Gee - we did not even enter a 'technical recession' while the global financial markets were in meltdown.
8. Demand is still exceeding supply. New housing starts are still weak. This pushes up prices of existing stock.
9. Immigration still high, yadda yadda
 
Another thing you see is valuations that come in low because valuers are working off 3 month old sales data.

You're not wrong there!
I asked for a valuation in July on my colyton IP i bought in Dec 2008 for $226K.
Good condition 3bed/1bath house on 600sq.m
.... Came in at $245K!!

Now you cant buy a 3bed house for under $270K in colyton. Valuers are waaaay behind the eight ball.
 
I'm hoping to see a slight dip in prices in mid-market (so I can buy my next PPoR!) but I think the main kicker for FHB is the waiver on Stamp Duty, which is in full effect until December 31st.

So until that ends, I don't think we'll see much happening on Oct 1.
 
I figure if my house doesn't sell by the end of September its not going to sell at all, and we are going to have Big Issues.

The biggest of which is we're going to be digging our own enormous great hole to save money on the plumber - money that would otherwise have come from the house sale. Its 'interesting' saving such a huge percentage of our income at the moment for fear of the house not selling. Tuna and Gippsland indeed.
 
We've started poking around out there, shovel in hand. Its the end of winter, the soil is soft, the weather is mild, there are no rocks to break through, just loam that goes quite deep.

I need to ask the plumber how deep to dig it though - I suspect it may need to be 2m deep x 3m x 2m plus trench, which probably explains why it is a $4000 job - their time @ lots per hour + hiring a crane and one of those big digging thingymebobs.

We dug our own 25m long trench when we got the house replumbed - it was a horrible job but it saved us a minor fortune - they charge $140ph.
 
It will be interesting to see whether there are any FHBs waiting 'for the market to drop' so they can come in and snatch a bargain post FHOG boost. Plus, the investors waiting in the wings. Plus, the people upgrading waiting for the market to soften.

It's hard to see it dropping much, at least in the major cities. I still wouldn't be surprised if we see a prolonged stagnation some time during the next 10-12 years though. But once Gen X gets into its peak spending period during the '20s, quality property will be through the roof.
 
Maybe.

It would certainly explain why the market has gone ABSOLUTELY BANANAS in some areas of Melbourne.

$16k for free is a strong motivator.

I'm still eligible and I feel a sense of urgency to purchase. Wouldn't be surprised if I can get the same property for $7k less once it goes away though.
 
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