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First home buyers in Australia’s second-most expensive market may be “cut out of the market” after changes to a government grant.
The Northern Territory has announced that as of 1 January 2015 the territory government will no longer pay $12,000 grants to first home buyers who buy established properties in Darwin and surrounds.
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The government will instead pay $26,000 to first home buyers who purchase or build new homes, as it looks to stimulate development ahead of a forecast boom in Darwin’s population.
According to Australian Property Monitors, the median house price in Darwin in the March quarter was $675,000. That was higher than the Melbourne median of $604,000 but less than the Sydney median of $783,000.
Loan Market Darwin broker Bren Rodda said the new government policy would make life very difficult for first home buyers.
“I think it’s cutting first home buyers out of the market because the new builds are more expensive. They can’t buy the entry level properties any more,” he told The Adviser.
“I believe it’s going to cut a lot of first home buyers out of the market that are looking at that $350,000 to $400,000 range.”
Mr Rodda said he understood what the government was trying to achieve but said it was unclear what impact this would have on the Darwin market and his business.
Jeff Pinkerton from Jeff Pinkerton Finance also said the new policy would make life tough for first home buyers, but felt it was necessary to stimulate new construction.
He told The Adviser that he held no fears about damage to his business because the drop in clients buying established houses would be balanced by the rise in people buying new homes.
