One-third of economists think Australian first home owner grants should be dumped

Posted: 1 August 2016 8:14 am

The push is on to reduce exemptions for first home buyers.

Bad news for first home buyers: economic uncertainty may soon put a stop to the first home owner grant schemes offered in many states.

Economists surveyed for's monthly RBA cash rate survey generally aren't in favour of the grants. In the survey, 38% said the schemes should be abolished entirely, while 31% say they should be reviewed. While the extra funds from a grant can make it easier to purchase your first home, economists argue that the availability of these funds can push up property prices, effectively eliminating that advantage.

First home owner grant rules vary between states, but typically require that the home is the first property you have purchased, that it is purchased to live in, and that it falls below a certain value. Most states have a $10,000 grant, but the figure is higher in some less populated states; in the Northern Territory, for instance, it's $26,000. Many states also offer concessions on stamp duty for first home owner grant recipients. Our full guide to first home owner grants has much more information.

Dumping the schemes would be tricky for governments, however. Arguments about markets favouring established buyers are already raging, and with no changes anticipated to negative gearing rules, proposing a scheme that makes it harder for young house buyers to get a foot in the market might be electorally risky.

Economists in the survey were divided over whether tomorrow's Reserve Bank meeting will see the cash rate held. 56% believe the rate will be cut for the second time this year, while 44% believe rates will be held. With last week's inflation figures at record lows and the Senate results from the recent election still not finalised, the decision could easily go either way.

Picture: Shutterstock

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One Response

    Default Gravatar
    mickAugust 2, 2016

    I thought that investors were pushing up prices, not home owners.
    The better strategy would be to REMOVE NEGATIVE GEARING FOR ALL NEW INVESTMENTS and then increase the grant. Problem solved………but don’t expect any coalition government to consider anybody other than business and the rich. They never do.

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