2015 – First Home Owner’s Grant
The Real Estate Institute of Queensland (REIQ) firmly believes that home ownership provides a range of benefits to both individuals and the wider community. The notion of owning a home is vital to the community and provides significant material benefits beyond the simple provision of shelter. Home ownership fosters social stability, economic reliability, community assurance, and assists both individuals and families in achieving independence and security.
Consequently, the REIQ is urging all political parties to reform the First Home Owner’s Grant. This would help ordinary Queenslanders fulfil their aspiration of owning a home. In this policy statement the REIQ outlines a policy to lift the current restriction on established homes across the entirety of Queensland.
However, should this proposal be seen as too challenging in the current fiscal environment, we propose that the Grant at the very least be broadened to include established properties throughout regional Queensland.
The First Home Owner’s Grant is an initiative that is critical to assisting individuals and families realising the dream of owning their own home. Currently, depending on the date of contract, first home buyers will receive either $15,000 or $20,000 towards the cost of building and buying a new house, unit or townhouse. To be eligible the following provisions apply:
- recipients must be an Australian citizen, a permanent resident or applying with someone who is;
- neither the recipient nor their spouse can have previously owned property in Australia;
- recipients must be at least 18 years of age; and
- recipients must be buying or building a new home that is valued at less than $750,000.
Previously, the Grant was not restricted to only new homes, and also extended to established properties. However, in the 2012-13 Budget, the then Government limited the scope of the Grant to only new homes as a savings measure.
The REIQ believes that it is time the eligibility for the Grant was broadened to assist people across the State achieve home ownership and expand the Queensland economy.
The REIQ is advocating two policy proposals to all political parties and candidates in the 2017 Queensland State election. We believe that both policy options would assist Queenslanders in achieving their dream of owning their own home. Further, both proposals would also generate economic benefits throughout the State, particularly in regional Queensland.
Option 1 – Broaden the Grant to established properties
Since the eligibility criteria was restricted to only new homes, the REIQ has routinely advocated to successive governments on the need to broaden the Grant and to make it accessible to those also purchasing an established home. The REIQ believes that extending the Grant to existing properties would provide the following benefits:
- greater assistance to young people in obtaining home ownership sooner;
- help people in regional Queensland gain access to the housing market given the high construction costs associated with building a new home in these areas; and
- remove the inconvenience that comes with having to find a temporary place to live in when building a new home, as well as any additional costs that can arise throughout the process.
Option 2 – Broaden the Grant to established properties in regional Queensland
The REIQ acknowledges that Queensland is currently facing a challenging fiscal environment and that a broadening of the Grant across the board – despite the many benefits that would bring – may not currently be a practical option for whichever party forms Government.
In recent times, the economy in regional Queensland has experienced a drastic slowdown following the downturn in the mining boom, resulting in a slump in these property markets. Indeed, the Valuer- General’s 2016 Property Market Movement Report confirms that regional Queensland has experienced static to falling property values1. The REIQ therefore urges all political parties in the 2017 Queensland State election to consider extending the Grant to established properties in regional Queensland.
In the period from 2012 – when the Grant was wound back to only new homes – to April 2016 only 4,505 grants were accessed across regional Queensland. This pales in comparison to South East Queensland where 12,944 grants were issued to new home owners2. Clearly, there is far less incentive to build a new home in regional Queensland than in metropolitan parts of the State.
A major reason as to why the Grant struggles for demand in regional Queensland is due to high construction costs in these areas compared to the South East corner. In almost all instances, the value of the Grant is outstripped by the costs associated with building a brand new home. Moreover, the Valuer’s Report also found that the supply of established houses is higher in regional Queensland due in part to unemployed workers putting their properties on the market as they move out of the area to find work.
The REIQ understands that the purpose of restricting the Grant to only new houses is designed to stimulate economic activity in the construction industry. However, when it comes to regional Queensland, it is clearly failing to achieve this. The data unequivocally demonstrates that the Grant is only achieving this in the South East corner where construction is more affordable. Hence, there is little to no economic gain to be made by continuing to limit the Grant to new housing in regional parts of the state.
Broadening the Grant to established homes in regional Queensland would achieve the following:
- create buyers for the oversupply of existing homes in regional Queensland;
- reduce mortgagee in possession sales;
- provide the Government with transfer duty revenue as first home buyers return to the market to purchase subsequent properties;
- boost consumer confidence in regional Queensland; and
- assist regional Queenslanders to fulfil their aspiration of purchasing a new home at a price that is as affordable as possible.
The REIQ is proposing to all political parties in the Queensland state election to commit to reforming the First Home Owner’s Grant and has provided two policy options for achieving this. Home ownership is engrained in the Australian dream and incentives should be in place that assist ordinary Queenslanders in making this dream a reality. The Grant should therefore not be restricted to newly built homes.
Regional Queensland in particular is in dire need of measures to stimulate local economies following the mining downturn. An easy and effective way of achieving this is to generate increased activity in the property market by making the purchase of established properties more affordable for the average Queenslander.
About the REIQ
The REIQ has been the state’s peak professional association for the real estate profession since 1918. With almost 100 years’ experience, few associations hold the reputation or brand recognition of the REIQ in Queensland.
Today, it represents approximately 4,500 individual members, around 1,550 agency offices, and more than 15,000 property professionals including principal licensees, salespeople, property managers, resident unit managers, auctioneers, business brokers, buyers’ agents, and commercial and industrial agents in Queensland.