Melanie Hearse - 22 Mar, 2021

First home buyers drive property market through government stimulus

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Housing sales in 2021 are expected to continue to be driven by first home buyers entering the property market, courtesy of government incentives and stimulus packages.


Australia has recorded a ten-year high for first homes buyers in the last quarter, according to the Australian Bureau of Statistics (ABS). Lending indicators for October 2020 showed first home buyers leading residential housing market improvements, with the number of owner-occupier first home buyer loan commitments increasing by 3.4% in October – more than 30% higher than in any pre-COVID month since 2009.

“Demand has been supported by historically low interest rates and more government support, such as the First Home Loan Deposit Scheme and HomeBuilder,” said NAB Executive, Home Ownership, Andy Kerr.

“A brief pullback in property prices also helped first home buyers as the uncertainty of COVID-19 put many plans on ice, with investor demand slowing noticeably.”

Mr Kerr said NAB’s lending to first home buyers in the three months ending October 31 increased by 21% against the 12-month average, adding that first home buyers represented the only growth in the market during this time.

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father and son reading in their new home

What grants and concessions may be available to First Home Buyers?

A one-off government payment, the First Home Owner Grant (FHOG) was created to encourage and assist first home buyers to jump onto the property ladder. Managed by each state and territory independently, eligibility criteria and conditions vary between them. Additional Government grants and concessions may also be applied to eligible first home buyers and properties, as follows: 

ACT

While not offering an official FHOG, the territory does offer a means-tested full stamp duty concession to all first home buyers on all properties.

New South Wales

NSW offers a $10,000 FHOG to build a new home valued under $750,000 or to purchase a new home less than $600,000 in value. First home buyers may also claim:

  • No stamp duty for homes valued under $650,000, or vacant land under $400,000,
  • Stamp duty reductions on homes up to $800,000, or up to $1 million for new homes and $500,000 for vacant land,
  • No insurance duty on lender’s mortgage insurance.

Eligible first home buyers are required to live in the home for at least six months in the first year of owning it.

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Northern Territory

The Northern Territory offers a FHOG of $10,000 for first home buyers purchasing or building a home of any age to eligible applicants.

Buyers may also be eligible for the BuildBonus grant and/or the Territory homeowner discount, which is a stamp duty discount of up to $18,601. 

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Queensland

In Queensland, the FHOG offers $15,000 for eligible first home buyers who are buying or building a new or substantially renovated home up to the value of $750,000.

Recipients must move in within the first 12 months of owning the property and live there continuously for at least six months.

Regional buyers who purchase by 31 March 2021 may also be eligible for a regional home building grant of $5,000 if the new build is valued at less than $750,000.

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South Australia

South Australia offers a $15,000 grant for new residential homes valued up to $575,000. Recipients are required to live in the property for the first six months at a minimum.

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Tasmania

First home buyers can apply for up to $20,000 for buying or building a new home, and may also be eligible for a 50% stamp duty discount if the property has a dutiable value of $400,000 or less. 

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row of houses in tasmania

Victoria

Victoria offers first home buyers up to $20,000 for building or buying a new home up to five years old in regional Victoria or up to $10,000 for city dwellings to a maximum purchase price of $750,000. First Home Buyers may also be eligible for:

  • Duty exception for new homes and established homes if valued at $600,000 or less,
  • concessions for a principal place of residence (PPR) with a dutiable value between $600,001 and $750,000,
  • PPR concessions for new or established primary residence homes valued up to $550,000,
  • From 25 November 2020 to 1 July 2021, residential homes in Victoria valued at up to $1 million are also eligible for a 50% duty concession, regardless of primary residence status,
  • a duty concession or exemption on a property valued at up to $200,000 for families with at least one dependent child under 18 years of age,
  • An off-the-plan duty concession.

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Western Australia

Western Australia offers a FHOG of up to $10,000 for buying or building a new home for residences with a total value of $750,000 south of the 26th parallel (including all of the Perth metropolitan area) or up to $1 million north of the 26th parallel. First home buyers may also be eligible for:

  • Stamp duty exemption where the first home is valued at up to $430,000, and a concession if it is valued at up to $530,000.
  • Home Buyers Assistance Account – a grant of up to $2,000 to cover the incidental expenses of purchasing an established or partially built home, for properties with a purchase price of up to $400,000.

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What is the HomeBuilder grant and can first home buyers use it?

The HomeBuilder grant provides eligible owner-occupiers with a grant to build a new home or substantially renovate an existing home. This includes first home buyers, who may also be eligible to combine it with other incentives and schemes, however, do check carefully as there may be exclusions.

The Homebuilder program was set to end in 2020, however, it has been extended to 31 March 2021. Key changes to the programs, now in effect include:

  • A $15,000 grant for building contracts (new builds and substantial renovations) signed between 1 January 2021 and 31 March 2021, inclusive.
  • An extended deadline for all applications to be submitted, including those applying for the $25,000 grant and the new $15,000 grant. Applications can now be submitted up until 14 April 2021 (inclusive). This will apply to all eligible contracts signed on or after 4 June 2020.
  • An extension to the construction commencement timeframe from three months to six months for all HomeBuilder applicants. This will apply to all eligible contracts signed on or after 4 June 2020.
  • An increase to the property price cap for new build contracts in New South Wales and Victoria to $950,000 and $850,000, respectively, where the contract is signed between 1 January 2021 and 31 March 2021, inclusive.
    • The existing new build property price cap of $750,000 will continue to apply in all other States and Territories.
  • A change in licensing requirements and registration for builders, as below:
    • Where an eligible contract is signed on or after 29 November 2020, the builder must have a valid licence or registration before 29 November 2020.
    • Where an eligible contract is signed before 29 November 2020, the builder must have a valid licence or registration before 4 June 2020.

Other than the above, existing program criteria applies. For all new build contracts signed between 1 January 2021 and 31 March 2021:

  • Eligible owner-occupier purchasers will receive a $15,000 grant; and
  • The property price caps for new builds in New South Wales and Victoria will be increased to $950,000 and $850,000 respectively.

In addition, the construction commencement deadline has now been extended from three months to six months for all eligible contracts signed on or after 4 June 2020.

Aerial view of housing development and construction in a newly established suburb in the area of Ginninderry in Canberra ACT Australia

Where are first home buyers buying?

NAB data from December 2020 revealed regional areas and outer suburbs are most in-demand among first-time buyers, as commute times become less of a factor in choosing a home location for many Australians. By state (or territory), first home buyers are snapping up homes in:

NSW

  • Greater Sydney: Abbotsbury +157%, Newington +70% and Penrith +68%.
  • Outside Sydney: Ballina +148%, Port Macquarie +143%, Wyong (Central Coast) +111%, and Wallsend (Newcastle) +65%.

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VIC

  • West of Melbourne CBD: Armstrong Creek +97%, Waurn Ponds & Belmont +56%, Melton South +38%, Tarneit & Hoppers Crossing +22%.
  • East of Melbourne CBD: Chelsea and Edithvale +60%, Dandenong +50%, Noble Park +32%, Clyde +32%, Pakenham +27%, and Cranbourne +23%

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QLD

  • South-east: Browns Plains (Logan City) +106%, North Lakes (Brisbane) +99%, Coomera (Gold Coast) +94%, Central Ipswich +93%, and Greater Springfield (Ipswich) +67%.
  • North and west: Mount Isa +115%, and Hervey Range and Bohle Plains (Townsville) +64%.

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WA

  • Perth: Nollamara & Mirrabooka +107%, Huntingdale +91%, Morley +78%, Cannington +63%, and Armadale +63%.
  • Regional: Geraldton +117% and Kalgoorlie +62%.

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SA

  • Adelaide: Salisbury +68%, Clearview and Enfield +52%, Oakden and Hillcrest +51%.

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Words by Melanie Hearse

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