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FIRST HOME OWNERS GRANT benefiting borrowers

Tuesday, April 26th, 2016

New research conducted by the Real Estate Institute of Australia has confirmed that the first home owners grant does help new buyers in the long run.

“The FHOG for existing houses is an important part of the housing affordability mix, with 70 per cent of Australians choosing to buy an established house as their first home,” REIA president Pamela Bennett said.

“The Housing Supply and Affordability Reform (HSAR) working party who’ve undertaken econometric research of the impact of the grant on the Western Australian and Tasmanian markets, found the problem lies with the supply side constraints. In the short term, where supply is constrained, the grant can increase house prices.

“However, even in these short term circumstances, whilst the grants may increase the house prices, the increase is significantly less than the grant, leaving the first home buyer better off.

“Over the longer term, with supply becoming more elastic, the FHOG had a lower impact on house prices and thus provided benefit to first home buyers.

“The widening gap between housing supply and demand demonstrates that the fundamental issues determining the delivery of supply remain unaddressed with affordable housing being the casualty of the under supply of housing.

“Critics of the FHOG should remember that the grant is not the problem. It is the constraints on supply that are.”


Author: Lynne Cox

She is a Mortgage Broker and holds an Australian Credit Licence # 365386. She has been involved in the Mortgage Broking Industry since May 1996 but has been involved in small business since 1977. Lynne is a licensed finance broker. She was the President of the Finance Brokers Association of Australia until March 2004 where she is now a Life Member, and she was also a Member of the Finance Brokers Supervisory Board until it disbanded in October 2003.