It is tipped changes will be made to the first homebuyers grant in the state budget. Picture: Ian Mainsbridge
THE Real Estate Institute of WA says it is concerned the state budget will have bad news for first home buyers.
The institute believes the Barnett Government is set to abolish the first home owner grant on established homes when the budget is delivered on Thursday afternoon.
Such a move would prompt an immediate backlash from the property sector, as it would "skew the market".
REIWA president David Airey ambushed Premier Colin Barnett on ABC radio on Wednesday morning, inviting him to quash the rumour that the $7000 First Home Buyer Grant (FHOG) would be axed on established homes. The Premier evaded the issue.
"You'll have to wait till tomorrow," Mr Barnett said.
The peak industry body representing about 80 per cent of real estate agents in WA is also concerned there may be budget pain in the area of stamp duty.
It has warned the state government not to mess with funding arrangements for first home buyers in the budget.
Currently the state government exempts first home buyers from stamp duty on purchases under $500,000, saving most around $14,000.
In addition to this, the state distributes $7000 to eligible first home buyers through the FHOG.
Mr Airey said relief from stamp duty was a huge saving to first time buyers while the FHOG itself helped many into their first home at a time when house prices had grown significantly since the grant was introduced in 2000.
"Together these two benefits to first home buyers have helped nurture and grow this market to the point where activity is now very strong, he said.
"Other states which have done away with stamp duty relief and changed the rules on the FHOG have seen the numbers of first home buyers crash through the floor."
Currently the FHOG scheme provides the grant to first home buyers who purchase an existing home and also to
those who built a new home on a block.
However, Mr Airey said there were worrying signs that the Barnett government will abolish the FHOG for existing homes and apply it only to those which are newly built.
"This will disadvantage around 70 per cent of first home buyers who prefer an established home over a house and land package and this in turn will distort the market at a crucial time in its recovery," Mr Airey said.
Mr Airey said first home buyers were currently very strong in the market as they took advantage of stable prices and low interest rates.
"It would be a dreadful policy decision to mess with this in any way because the repercussions will ripple through the whole housing sector," Mr Airey said.
Mr Airey said it was nonsense to suggest that shifting the FHOG to new-builds only would assist the construction industry, because it was already under strain from strong demand.
According the Office of State Revenue, the median purchase price for first home buyers across WA in June was $430,000.
In June there were 1,681 FHOG grants paid with just 483 requested for new builds.
REIWA is urging the government not to create more turbulence at a time when a sensitive market was just moving into a more stable phase.
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