THE unexpected axing of the $5000 boost to the First Home Owner Grant could see first-home buyers rush to make a purchase before the June 30 cut off and The Agency director Marc Drexel has urged them to approach their purchase with care.
“The $5000 boost saw increased interest in off-the-plan projects, and this may surge slightly in the next few weeks, but first-home buyers should not rush to make a purchase,” he said.
“In their desire to secure a home and the extra money, they may put themselves in a difficult situation.”
Mr Drexel said the biggest risk with purchasing off the plan was that the project might not be completed.
“Many off-the-plan projects may not get off the ground due to the challenging, current financial circumstances,” he said.
“A developer selling off the plan may have to sell up to 70 per cent of the project before they can go ahead,” he said.
“Each sale may need to have 10 per cent deposit and is likely to have to be unconditional; this is often a condition precedent of the developers’ own financial terms.
“If the developer does not meet sales targets and cannot finance the project, it may not go ahead.
“After the contract sunset clause (often two years or more), the first-home buyer would get their deposit refunded and will have to find another home.”
By comparison, Mr Drexel said completed apartment projects may require a much smaller deposit (such as $10,000), often conditional finance terms are accepted and the First Home Owner Grant and the boost were currently available to eligible buyers.
“In addition you get to see the quality of the finished product before you make your purchase,” he said.
“And you can move in right away and don’t have to wait years for your home to be completed.”