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Home Buyers Rush to Beat End of First Home Owner Grant in SA

The demise of the $5,000 First Home Owner Grant (FHOG) for established homes in South Australia on 30 Junei is causing a last minute flurry to beat the impeding deadline in suburbs such as Salisbury and Morphett Vale.

Raine & Horne Salisbury principal Andrew Harvey reports that first home buyer numbers are about 50% stronger than three months ago, with the end of the grant contributing to beefed-up activity.

“In our market, which is about 25 minutes by car north of the Adelaide CBD, demand for properties priced below $340,000 is hot as buyers rush to beat the June 30 deadline,” says Mr Harvey.

“First time buyers in the Elizabeth region, where it’s possible to buy an entry-level three bedroom home from $200,000, will be very much disadvantaged by the expiration of the $5,000 grant for established homes.”

In another commuter suburb, Morphett Vale, to the south of Adelaide, Jen Drabic, co-Principal of Raine & Horne Morphett Vale, agrees that the end of the grant is attracting first time buyers to her market.

“We’re definitely seeing a pickup in first home buyers and there is a level of anxiety to buy properties,” says Ms Drabic, who reports a 30% jump in first-time buyer activity in recent months.

To illustrate, Raine & Horne Morphett Vale is selling a three bedroom, one bathroom, brick veneer home at 8 Wylpena Way, Reynella East, which is priced between $279,000 and $299,000.

“We had a number of enquiries for this home, but two stand out, as they are first home buyers who were very keen to buy before the grant ends in two weeks,” says Ms Drabic.

“It’s for this reason we are not looking forward to the end of the grant, as about 50% of our transactions involve first home buyers.”

Raine & Horne SA CEO, Michael McDonald, says the end of the FHOG will tip the scales increasingly in favour of investors.

“We were hoping that with the change of government in South Australia at the end of last year, there would be a stay of execution for the FHB grants,” says Mr McDonald.

“Sadly this hasn’t happened, and the situation from 1 July will be much harder for first timers, as has been the case when similar cuts to grants were imposed in the eastern seaboard states a few years ago.”

According to Mr McDonald, the South Australian property market is beginning to produce some capital growth and therefore the decision to close the grants will only make it tougher for first time buyers.

“With the Adelaide average median house price hitting $395,000 recently, we’re almost back to the peaks of September 2010, so all the ducks are in a row for investors, but we’re doing next to nothing for first home buyers,” says Mr McDonald.

“In Adelaide, we don’t have the contingency of a strong apartment market to help ease first time buyers into real estate – our unit market is still in its relative infancy compared with Sydney and Melbourne.”

i http://www.revenuesa.sa.gov.au/grants-and-concessions/first-home-owners

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