Since it was announced two weeks ago that the First Home Owners Grant (FHOG) for established homes in Queensland will soon become like the dodo – that is extinct – it was predicted that those first-timers who could afford too, would jump head-first into property ownership before the FHOG disappears forever next month.
Some recent media reports have been indicating that first home buyers have been scrambling over themselves at open homes over the past two weekends so they could get their hands on the $7,000 smackeroonies before it was no longer available. Alas, this appears to be slightly exaggerated.
The REIQ called its zone chairs across South East Queensland on Monday morning to see how they were coping with the hordes of first home buyers clambering to buy established property before the 11 October deadline. But it appears there aren’t any hordes, generally there is just the same amount of activity there was before the announcement that the FHOG was being scrapped in favour of a grant for new builds only. That grant will provide $15,000 to first home buyers of new homes – however, history shows us that less than a quarter of first-timers opt to buy new homes.
This is usually because new properties are generally too expensive and, new houses especially, are often located miles from where all the action is that young people want. Plus, if the car that I owned when I was in my 20s is anything to go by, big commutes to and from work would just end up costing them more money in fuel and possibly in fees to a mechanic.
While there hasn’t been a big bounce in activity over the past two weeks this is not necessarily a bad thing. In fact it shows that, contrary to some alarmist commentators, first home buyers are not mindless doof-heads who blindly pop out on a Saturday morning and buy a property just because the government is offering seven thousand big ones.
REIQ research shows that first home buyers actually spend about two years saving for a property and are generally also keeping an eye on the market over that time period as well. They also tend to search for a property for more than four months once they are financially ready to buy. This all points to the fact that first home buyers take seriously the purchase of their first home – and so they should, as it is likely to be the biggest financial investment they will ever make.
With interest rates low, and possibly heading lower please Mr Stevens, as well as property prices being the most affordable they have been in years, first home buyers had been fairly active in the Queensland market this year. But the removal of the FHOG will certainly set many back from buying their first home, possibly for a year or more. With the rental market already starting to strain due to more demand than supply, we can only hope that increasing rents are not the end result of first home buyers again being relegated to the sidelines.
By Nicola McDougall, Executive Manager Corporate Affairs, REIQ