More generous first home owner’s grant fails to impress brokers

John Ruddick from John Ruddick Home Loans criticised the grant as “a form of socialism” that distorts prices and artificially boosts construction.

Mr Ruddick also said the grant sends the wrong message to first home buyers because it undermines the importance of saving and budgeting.

“It’s good for mortgage brokers, no doubt about that, but it’s bad for the taxpayers and first home buyers,” he told The Adviser.

“If you can only buy a house because the government has given you some free money, that’s not a good introduction to buying your first property.”

Loan Market Double Bay broker Daniel Pym said he supported the $100,000 increase to the threshold, but felt it was wrong of the government to steer first home buyers to new properties.

“They’re just starting out, so they should have the most flexibility to buy anything they want,” he said.

Mr Pym said the increased threshold would bring little benefit to his business because there are few properties in the Double Bay area priced under $750,000.

Lifestyle Home Loan director Mike Fitzsimmons also said he would get minimal benefit from the new threshold, even though homes in his Newcastle market are priced at about $500,000.

Mr Fitzsimmons said the change of government policy wouldn’t affect Newcastle because of the lack of new homes between $650,000 and $750,000.

He told The Adviser that the best way to stimulate the market would be to open up the grant to established homes.

“That would lead to a sizeable jump in the market, it would create activity and things would get rolling again,” he said.

NSW is not the first state to change its first home owner’s grant – South Australia, Tasmania and the Northern Territory have also recently announced new policies.

[Related: Brokers concerned as NSW tipped to raise property taxes]