Victorian first home buyers win big

The Federal Government’s decision to extend the boosted first home owner grant, coupled with a Victorian Government’s boost of its own, means Victorian home buyers will win big between July and October 2009.

The Victorian budget, released last week, announced incentives for first home buyers purchasing a property worth less than $600,000.

Victorian Treasurer John Lenders announced that the grant would increase by $5000 to $11,000 for buyers of new homes, but that grants for existing homes would drop by $1000, to be set at $2000. The grant for newly constructed homes in regional areas will increase to $15,500.

Federal Treasurer Wayne Swan announced in the federal budget that the Government would extend its first home owners boost, keeping it at its full value for three months before stepping it down.

The grant currently stands at $14,000 for existing homes, and $21,000 for new homes. After 30 September 2009, it will drop to $10,500 for established homes and $14,000 for new properties.

The grants mean that a first home buyer in metropolitan Victoria will receive $32,000 from both the Federal and Victorian governments for buying a newly constructed property between 1 July and 30 September 2009.

Between 1 October and 31 December 2009, that same buyer will receive $25,000 for the purchase of a new home.

The new grants are certain to bring in more new home owners, but many analysts are uncertain as to how the market will perform when the grants are phased out and scrapped after 31 December 2009.

Head of property research at Advisor Edge, Louis Christopher, says the new grants will stimulate the market, but any drop off from first home buyers when the grants expire will be negated by investors returning to property.

“I think what’s going to happen sooner or later is that there’s a gap or a hole without first-time buyers. At that point in time, investors may well be in the market if early signs of recovery show,” Christopher says.

“Property will rely on investment activity; that day will come. And for the rest of the country it will happen during the rest of this year. Victoria is a little bit delayed, but investors will enter the marketplace and I’m optimistic about that.”

Related story:

• First home owner grant extended for three months