Big rise in first-home grants

But REIWA chief warns activity won’t last
But REIWA chief warns activity won’t last

FIRST home owner grants (FHOG) have risen more than 33 per cent in WA since last May and southern suburbs are leading the resurgence.

The Department of Treasury granted 1972 FHOG applications in May, with Byford (260), Piara Waters (243) and Canning Vale (238) sitting third fourth and fifth respectively on the list of top suburbs.

Baldivis was easily the most popular suburb with first home buyers, with 564 grants signed off in May.

Thornlie was seventh and Harrisdale rounded out the top 10. Gosnells (179) was 11th, Southern River (170) 14th and Seville Grove (135) was 20th.

Urban Development Institute of Australia WA chief executive Debra Goostrey said first home buyers were taking advantage of the Reserve Bank board’s decision to cut the cash rate to a historical low in May.

‘There were 34.2 per cent, or 5384, more FHOG applications over the year to May, and nearly double as many application as two years ago,’ Ms Goostrey said .

‘For many first home buyers, the cost of servicing a mortgage is similar to or less than what it costs to rent.’

Ms Goostrey said suburbs with new land releases dominated the list. She said Baldivis sales were up 69 per cent compared with last year and Byford was up 59 per cent.

Real Estate Institute of WA president David Airey said the first home buyer activity would stimulate the rest of the market but he warned that it would not last.

‘Trade-up buyers, those looking to move to their second or third home, need a pool of buyers to buy their existing second-hand home,’ Mr Airey said.

‘The trade-up market, which is around 70 per cent all buyers, is facilitated by first home buyer activity. The more active first time buyers are, the more active the entire market is. It’s a domino effect.

‘Currently it’s very high at around 30 per cent of the overall market. Normally it’s 22 per cent, so I think it will settle down for the remainder of this year.

‘There are only so many first home buyers out there, it’s a finite pool of people. Many have jumped into the market in recent times because of very low interest rates, good prices and a stable market. But this pool of potential buyers will start to drain.’