The first home owners grant to rise, but will the rise cause more inflation of home values?
Used home market prices are expected by some to rise as a result of the substantial lift in the First Home Owners Grant announced by the Federal Government recently. But according to Mr Mortgage that history will not repeat itself because the times are different.
Some people take the view that the price of used homes will go up about the amount of the grant, and they are expecting a house buying stampede [or trying to talk one up]
But if the way the market had reacted to the higher grant is any indication, the potential first home buyers out there are in no hurry to pull the trigger just yet. They are wisely playing a wait and see game. Will Australia go the way of the US and the UK and see a sharp drop in Real Estate values and home prices. The market looks like this is the way it will be going.
Under the Government Grant, first time home buyers purchasing established homes will have their grant doubled from $7000 to $14,000.
First-home buyers purchasing a newly constructed home will be eligible for a $21,000 bonus.
Including the State Government’s $4000 grant for homes up to the value of $400,000, a home buyer constructing a new home could receive $25,000 towards the first property.
Whilst this is helpful, it does not address the unlying issue. That home prices are too high and some say unsustanably so, because the way the real estate market and the home building industry operate in Australia is expensive and inefficient.
Rick Adlam is the founder of Australian Mortgage Exchange and Mr Mortgage
