More first-home buyers choosing established homes

Stock image.
Stock image.

FOLLOWING a swing towards new homes in recent years, more first-home buyers are choosing to buy established properties according REIWA.

Reiwa.com data showed the number of first-home buyers purchasing established properties increased 20 per cent in the 12 months to December 2018.

Since its introduction, the First Home Owner Grant (FHOG) has played a strong role in the preference for new homes.

In 2000 it was $7000 for new and established homes, and established homes represented more than 80 per cent of first-home buyer purchases.

Until 2013, when the grant for established homes was cut to $3000, established purchases represented 72 per cent of total transactions on average.

When the established homes grant was removed in late 2015, established purchases had fallen to about 55 per cent of transactions.

Following this, new homes, which can receive a FHOG payment up to $10,000, overtook established purchases several times, with established homes falling to a lows of 45 per cent of first-home buyer purchases in June and July 2016.

President Damian Collins said WA first-home buyer preferences had shifted back towards established properties, despite the grant only being in place for those who choose to purchase new builds.
There were a number of reasons for this.

“People want to be closer to the amenity they want and closer to work, there’s not a lot of choice of new homes in these more established areas so they have to buy existing homes,” he said.

“Property has become much more affordable in the last five years with falling prices and low interest rates, so they can even afford to buy in the inner city, although it might be a townhouse or villa rather than a house.

“In many cases, with prices as they are, they still qualify for stamp duty concessions.”

Mr Collins said within outer-lying suburbs, where a lot a building was taking place, there was oversupply leading to prices for completed homes falling and first-home buyers were taking advantage of this.

“It might cost them $420,000 to build, but they can buy something in the area that is one or two years old for $380,000,” he said.

“While they might miss out on the grant, they are saving $30,000 or $40,000.”

REIWA will continue to advocate for the reintroduction of a FHOG for eligible first-home buyers who purchase an established residential dwelling.

“As it currently stands, the WA FHOG unfairly penalises buyers wanting to purchase established properties by only providing assistance to those who choose to build,” Mr Collins said.

“It’s not fair that so many first-home buyers are missing out on the grant simply because they don’t want to build a new home.

“Or even worse, it means some first-home buyers who want an established property are unable to enter the market.”

Mr Collins said housing affordability remained a significant hurdle for many West Australians and all first-home buyers should be encouraged and incentivised to enter the market, not just those who choose to build their first home.

“The WA Government should respect the preferences of first- home buyers by not discriminating between established and new build properties, enabling more West Australians to make the dream of home ownership a reality,” he said.