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
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