South Australian brokers will have to wait and see how their businesses will be affected as the state government prepares to change its first home owner grant.
The current grant, which offers $5,000 to first time borrowers who buy existing homes, will be replaced on July 1 by a $15,000 grant to borrowers who buy new housing.
Neville Pedler from SA Finance Solutions said although the policy change would probably generate an increase in construction activity it would also have a negative effect on house sales.
“It’s definitely taking away enquiries from first home owners for the purchase of existing homes, and that is seeing a negative flow-on effect to property prices in that market,” he told The Adviser.
Mr Pedler said house sales in Adelaide had not yet recovered from the removal of a previous first home owner’s grant.
“The $18,000 in grants that were available for established homes in 2008/09 did create a short-term pricing bubble of the property market here at that time, which then fell away in the following years as these grants were reduced,” he said.
“Local sale prices of existing homes have been steadily increasing again, but haven’t really returned to what they were during that time, and there can still be some disappointment for those home owners who are selling but whose mindset for their expected sale prices are still linked to those earlier higher prices.”
Loan Arrangers managing director Steve Marshall said the change in government policy was unlikely to have much effect on his business.
“It’s going to have some impact on the market but first home owners are already being watered down. The number of first home owners has been decreasing progressively,” he told The Adviser.