Access to super is not radical: REIA

From The Real Estate Conversation.

If first-home buyers are allowed to use their superannuation to buy their own home, they are likely to end up with bigger ‘nest eggs’ at retirement than if they rented their whole lives, says Malcolm Gunning, president of the Real Estate Institute of Australia.

He said it is “nonsense” to suggest accessing super to buy a home will erode retirement savings, as both comprise the asset pool at retirement.

Giving young people access to their own money in a superannuation fund to purchase their first home should not be controversial, he said, and is already being used successfully in Canada, New Zealand, and Singapore.

“Accessing Super is not a radical idea,” said Gunning.

Gunning said first-home buyers are often able to save part of the deposit for their first home, but are turning to alternative measures, such as taking out personal loans and using credit cards, to get over the line and cover transaction costs.

“Surveys show that not only are aspiring homebuyers saving for longer but are also using debt to meet their deposit requirement,” he said.

Gunning said the idea of using some superannuation to help fund the deposit on a property purchase was “practical”, and could in fact mean young people have a larger ‘nest egg’ of assets at the time of their retirement.

“Superannuation and home ownership are both components of a retiree’s ‘nest egg’,” he said.

“By buying earlier in life, retirees have every prospect of having a higher equity on retirement and a larger ‘nest egg’ on downsizing.

“It is nonsense to suggest that early access to superannuation for a home deposit would undermine retirement savings,” said Gunning.

“Access to superannuation for the purchase of a first home could help reverse the trend of falling home ownership,” he said, adding that it addresses “the looming social problem of large numbers of long-term renters aged 45 years and over remaining in the rental sector and possibly requiring rental support in later years.”

Gunning said superannuation funds that invested in residential investment property have provided the best returns for their members over the last 20 years. He said individuals should be able to use their super to invest in their own home.

“REIA believes in the benefits of continuing the high ownership level in Australia, particularly as the population ages,” said Gunning.

“The Government should be applauded for considering a holistic approach to housing affordability which includes giving access to superannuation for first homebuyers,” he said.

Homebuyers told to brace for mortgage rate rise shocks

From AAP.

The Reserve Bank of Australia is set to hold its benchmark interest rate steady, but a new survey indicates that consumers should prepare for out-of-cycle rate hikes.

All 14 economists surveyed by AAP expect the RBA to leave the cash rate steady at a record low of 1.5 per cent at its March board meeting tomorrow.

Reserve Bank governor Philip Lowe in February spoke three times about keeping rates on hold to balance the need to boost inflation while maintaining financial stability amid record household debt.

JP Morgan senior economist Sally Auld said the market’s focus following the board meeting will be on the central bank’s comments about December-quarter economic growth of 1.1 per cent, which came in well above the RBA’s implied forecast of 0.8 per cent.

She said the tone of Dr Lowe’s remarks on the economy on Tuesday afternoon probably won’t deviate from the optimistic note struck in February’s interest rates statement.

“Still, we expect some RBA caution that the fourth quarter’s pace of consumption will be sustained, given that the staff assumes that households will be held back by elevated debt levels,” Ms Auld said in a note.

Meanwhile, in a new survey of 38 economists and interest rate experts, 90 per cent of respondents said they expected out-of-cycle rate rises from lenders in the near future.

The website’s insights manager Graham Cooke said first-homebuyers should practice their due diligence.

“With banks likely to lift mortgage rates out of cycle, the onus is on first-homebuyers to factor in potential rate rises to their budgets,” he said in a statement.

“Generally, mortgage holders should account for 2 to 3 per cent on top of their current repayments to avoid rate shock.”

Housing affordability: Experts see stamp duty cuts hiking prices

From The NewDaily.

House prices will increase thanks to a Victorian government decision to scrap stamp duty on some properties, according to experts who warn the move would benefit owners – not first home buyers – if rolled out across the country.

Victorian Premier Daniel Andrews on Sunday announced first home buyers would be exempt from paying stamp duty on properties under $600,000.

Tax discounts will also be rolled out on new and existing homes worth between $600,000 and $750,000 from July 1 under the plan to tackle housing affordability.

It estimated the stamp duty exemptions would benefit 25,000 first home buyers, who would save up to $15,000 – or an average of $8000 – on new purchases.

The move comes as NSW Premier Gladys Berejiklian and the Turnbull government face calls to address skyrocketing house prices in Australia’s south-east.

Prices rose 18.4 per cent in Sydney and 13.1 per cent in Melbourne in the 12 months to February, according to CoreLogic data.

Changes benefit owners

Despite Mr Andrews saying the reforms would place “downward pressure on prices” by creating more housing stock, experts warned buyers should expect to pay more for a home following the changes.

Leading Australian economist Saul Eslake said the only benefit for new buyers was that it “may reshuffle the queue of would-be house buyers”.

“This decision would be welcomed by owners and vendors of existing properties. It will allow those who have properties for sale to sell them at higher prices than they would otherwise get,” he told The New Daily.

“It will do nothing to assist those who want to join them as owners of one property.”

The stamp duty cuts form part of a series of recent housing reforms in Victoria, with the government doubling the first home buyer’s grant in regional areas and making changes to planning laws in Melbourne’s outer suburbs.

Mr Eslake, who advocated replacing stamp duty with a broad-based land tax, warned other states against following Victoria’s lead on stamp duty.

“If it were adopted by other states, the result would be to enrich those who already own properties to the detriment of those who don’t,” he said.

Grattan Institute chief executive John Daley said the Andrews government’s changes may help new buyers in areas where they were competing with investors.

“If you take places where most of the buyers are investors or second home buyers, it will genuinely help first home buyers. It will push up the prices a little but not very much,” he said.

“However, for areas where most of the purchasers are first home buyers, such as the areas on the city fringes, essentially most of the benefit will be passed on to the sellers.

“This will be a huge windfall for the large development companies who do developments on the edge of our cities.”

As the NSW Government mull its own plans to tackle rising house prices, Mr Daley urged the Premier to prioritise changes to planning rules, particularly Sydney’s middle-ring suburbs, to boost housing supply.

“Everyone agrees that’s the right answer, as long as it’s in the suburb next to theirs,” he said.

“Any government that is going to be serious about this, needs to make the public and political case.”

On Sunday, NSW Premier Gladys Berejiklian, who has declared house prices a top priority, said the government was keeping its options open.

“We know in the past governments have had made decisions which unfortunately have had the opposite effect,” she said.

“We don’t want to be in that situation; we want to make sure every decision we take on this important issue has the desired effect.”

Last month, CoreLogic data showed median house prices had reached $970,00 in Sydney and $711,000 in Melbourne.

First Time Buyer Stamp Duty Cut In Victoria As Part Of Housing Strategy

Changes to stamp duty for first time owner occupiers and a vacant property tax have been confirmed by the Victorian Government today.  Separately an equity share scheme was announced to assist first time buyers.

As a package of measures they will certainly impact the market, and whilst the tax breaks and first owner grants may simply lift prices, the tax on vacant properties and equity share strategies could certainly re-balance the market towards owner occupied purchasers. Our research shows there are more than 500,000 households in Victoria are currently struggling to enter the market.

Stamp duty will be abolished for first home buyers for purchases below $600,000, helping thousands of Victorians find their first home, as the Andrews Labor Government tackles housing affordability head on.

Those buying a home valued between $600,000 and $750,000 will also be eligible for a concession, applied on a sliding scale. The exemption and concession will apply to both new and established homes, in a move that is expected to help 25,000 Victorians find their first home.

In a further move to help tilt the scales back towards home owners, the Government will also remove off-the-plan stamp duty concessions on investment properties.

The off-the-plan stamp duty concession will now be available solely for those who intend to live in the property or who are eligible for the first home buyer stamp duty concession.

At the same time, a Vacant Residential Property Tax will address the number of properties being left empty across inner and middle suburbs of Melbourne.

Under the changes, owners who unreasonably leave these properties vacant will instead be encouraged to make them available for either purchase or rent.

The Vacant Residential Property Tax will be levied at 1 per cent, multiplied by the capital improved value of the taxable property. For example, if the property has a capital improved value of $500,000, the amount paid will be $5,000.

There will be a number of exemptions, recognising there are some legitimate reasons for a property being left vacant, including holiday homes, deceased estates and homes owned by Victorians who are temporarily overseas.

Each of these changes are part of the Labor Government’s plan to help more Victorians break into the housing market.

The Equity Share scheme HomesVic was also announced.

Thousands of Victorians, dreaming of buying their first home, will be able to make their dream a reality, thanks to two new changes announced by the Andrews Labor Government.

A new $50 million pilot scheme, HomesVic, will target first home buyers who are able to meet regular mortgage repayments, but because of rising rental costs, haven’t been able to save a big enough deposit.

Under the scheme, to be introduced in January 2018, HomesVic will co-purchase up to 400 homes, taking an equity share of up to 25 per cent in these properties. It will be available for both new and existing homes.

By allowing homebuyers to purchase less than 100 per cent of the property, they will require a smaller deposit and are able to enter the market sooner. In the long term, it will also mean having a smaller loan to service.

Eligible applicants will include couples earning up to $95,000, and singles earning up to $75,000.  Buyers will need to have a 5 per cent deposit. The pilot will be tested across the state, and when the properties are sold, HomesVic will recover its share of the equity.

To further improve buyers’ chances of owning their own home, the Labor Government will also contribute $5 million to a national, community sector, shared equity scheme, Buy Assist.

With similar goals to HomesVic, Buy Assist will help deliver an additional 100 shared equity homes and help low to medium income households get a foothold in the property market.

The Government is also set to give first home buyers priority in government-led urban renewal developments, with at least 10 per cent of all properties allocated to first time buyers.

This approach will be used for the first time at the Arden development.

The plan to develop the 56 hectare site Arden, announced by the Labor Government last year, could be home to around 15,000 people. Under this policy 1,500 of those could be first home buyers.

Finally, in a separate release, the overall portfolio of actions were summarised under “Homes for Victorians”

Every Victorian deserves the safety and security of a home.

But for many, that’s becoming increasingly harder.

A significant number of Victorians, particularly young Victorians, are struggling to break into the housing market.

House prices are rising and upfront costs – a deposit, stamp duty and fees – quickly add up.

It’s getting harder for renters too.

Many struggle to meet high rental prices, or instead choose to live in unsuitable housing. Some don’t have the security they need, or the capacity to personalise their home as they would like.

At the same time, the number of Victorians who need to access public and community housing is growing. Waiting lists are long, and many of our existing homes have fallen into disrepair.

In short, too many Victorians don’t have a real choice about where they live, or the type of home they live in.

And as our population grows, inaction will only make things worse.

Fixing this problem isn’t simple.

It’s why Homes for Victorians provides a co-ordinated approach across government, and across our state. It includes:

  • abolishing stamp duty for first time buyers on homes up to $600,000 and cuts to stamp duty on homes valued up to $750,000
  • doubling the First Home Owner Grant to $20,000 in Regional Victoria to make it easier for people to build and stay in their community
  • creating the opportunity for first home buyers to co-purchase their home with the Victorian Government
  • making long-term leases a reality
  • building and redeveloping more social housing – supporting vulnerable Victorians while creating thousands of extra jobs in the construction industry.

It builds on existing work being done, including the soon to be released Plan Melbourne 2017-2050, reform of the Residential Tenancies Act 1997, the Better Apartment guidelines and the Family Violence Housing Blitz.

It also builds on our efforts to better connect Victorians with services and infrastructure. From schools to health care, roads to public transport, regardless of where they live, every Victorian should have access to the things they need.

It’s a big job, but the aim is simple: to give every Victorian every opportunity to find a home.

VIC FTB To Get Stamp Duty Relief

According to various media reports, the Victorian Government has announced changes to stamp duty attached to buying property today.  Currently, first time buyers in Victoria get a 50 per cent stamp duty discount, but from July, the duty will be removed for first-home buyers in the state where the property costs less than $600,000. In a band between $600,000 and $750,000 there will be stamp duty reductions regardless of whether the property is new or existing. It will assist owner occupied buyers.

Around 25,000 people a year are expected to benefit from the changes with average first-home buyer saving an extra $8,000. Those buying close to the tax limit of $650,000 would be $11,000 better off.

In the financial year 2013-14, the Victorian Government received $3.5 billion in duty, now it stands at $5.7 billion. The changes would cost about $800 million over four years.

Also, a $50 million “HomesVic” program will begin in January 2018 to give about 400 buyers an option to co-purchase a home with the government in an equity share. Buyers will need a 5 per cent deposit to be eligible, and equity up to 25 per cent for each property which the government will recover when the property is sold,  The scheme will target couples earning up to $95,000 and singles earning up to $75,000.

Additional measures include a 1% land tax on vacant property and removal of some investment property stamp duty incentives.

These measures add to the to the land release and country first owner grants already announced. Combined they could make quite a difference to the market.

More First Time Buyers Open An Account At “The Bank of Mum and Dad”

We have updated our analysis of assistance first time buyers are getting from their families in a desperate effort to get into the housing market at a time when the entry barriers in terms of price and affordability are as high as ever they have been. In addition, high loan-to-value loans are less available, so first time buyers need a larger deposit, and first owner grants are harder to access. Savings interest rates are also very low.

We released analysis a few months back, which caused quite a stir as it highlighted the inter-generational  issues in play. We have now updated the quarterly analysis with data to December 2016.

First, more first time buyers are getting help from parents – up to 54% in the past quarter. This help varies from a loan for a deposit, a cash present, help with transaction expenses, or ongoing assistance with mortgage repayments or other household expenses.   Parental guarantees are falling out of favour.

Parents are able to assist, thanks to the wealth effect created by home price appreciation, which is still occurring in the eastern states, though more patchily elsewhere.

Just under half the assistance is going towards first time buyers in NSW (mainly Greater Sydney), where the affordability issues are most difficult, and home prices the highest. But other states are also, to some extent, also in the game.  Ignoring the volume growth, the percentage mix has been relatively stable.

But here is the volume picture, which shows the relative number across states (note the small counts in some states are less statistically robust), but the trends are clear.

Another cut on the data is looking at the type of property being purchased. In 2015, more investment property was is the mix, but now the growth is among owner occupied purchasers.

In terms of the value of the financial contribution, it varies. But for those making a loan or payment direct to assist in a purchase by way of a deposit, the average amount is now north of $85,000.

If parents bring forward payments to assist their offspring, it is worth asking whether this act of kindness may have unintended consequences.

  • First, are parents giving away some of their future financial security?
  • If it is a loan, is the basis of repayment clear, and documented?
  • When a bank assesses a mortgage application do they consider the source of the deposit – receiving a “seagull” lump sum is not the same as demonstrating a history of saving, and the risk profiles down the track are different.

It also raises complex questions around equity between siblings, and a whole raft of questions relating to inter-generational finance.

It is also worth remembering that more first time buyers are going to the investment sector before purchasing their own home for owner occupation, as our first time buyer tracker shows.

Home Lending Roared Away In December

The ABS data on home finance for December 2016 confirms what we already knew, lending momentum was strong. But now we see that the number of OO first time buyers were down, whilst investment lending was strongly up.

Overall lending flows were up 0.8% in trend terms to $33.2 billion, with owner occupied loans up 0.23% ($20 billion) and investment loans up 1.68% ($13.2 billion). As a result, investment loans were 39.79% of all loans written in the month! Much of this went to the NSW market, where demand is hot, and prices are up.

Within the owner occupied data, refinancing of existing loans fell, down 1.23% to $6.38 billion, whilst other OO lending grew 0.93% to $13.6 billion. The largest percentage swing was borrowing for new dwellings, up 1.49%.

Given rates are now on the rise, we expect refinance volumes to continue to slide.

Looking at the original first time buyer data, there was 7% fall in the number of first time buyer OO loans written, down to 7,690; whilst investment loans by first time purchasers (not captured by the ABS as a separate category) is estimated to be up 1.4% to 4,236 based on the DFA household survey data. Many purchasers are going straight to the investment sector.  The average loan was $319,000 for FTB and $384,000 for other borrowers.

Finally, the original stock data shows overall loan growth on ADI’s books rose 0.67 (which if repeated for a year would equate to 8%!), way above inflation, so no wonder household debt is still building. The investment loan book grew 0.63% or $3.4 billion, whilst the OO book grew 0.7% or $7.0 billion. The total ADI book was worth 1.56 trillion and investment loans made up 34.91% of the book in December.

Home Lending On The Rise

The latest housing finance data from the ABS underscores the renewed momentum in home mortgage lending, especially in the investment sector, and there was also a rise in first time buyers accessing the market.

  • The trend estimate for the total value of dwelling finance commitments excluding alterations and additions rose 0.6%. Investment housing commitments rose 1.7%, while owner occupied housing commitments was flat.  In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions rose 2.2%.
  • In trend terms, the number of commitments for owner occupied housing finance fell 0.1% in November 2016 whilst the number of commitments for the purchase of new dwellings rose 0.7%, the number of commitments for the construction of dwellings rose 0.2%, and the number of commitments for the purchase of established dwellings fell 0.2%.
  • In original terms, the number of first home buyer commitments rose by 13.4% to 8,281 in November from 7,302 in October; the number of non-first home buyer commitments also rose. The number of first home buyers as a percentage of total owner occupier commitments rose from 13.7% to 13.8%.

Total commitments in trend terms was $32.7 billion, of which $19.8 billion was owner occupied loans, and $12.9 billion for investment purposes. 39.5% of new lending was for investment purposes, and we see the proportion of investment loans continuing to rise, it is already too high.

Looking at the month on month movements, the seasonally adjusted changes highlight the rise in the investment funding for new construction, with a 40% rise on last month. Owner occupied refinancing fell.

The more reliable trend analysis shows the monthly movements, with a strong surge in investment loans by individuals, and a stronger fall in owner occupied refinancing.

Looking at total loan stock (in  original terms) around 35% of all loans outstanding are for investment purposes, and the slide we saw late 2015 appears to be easing.

Turning to the first time buyer, original data, the number of first time owner occupied buyers rose compared with last month, and the overall mix also increased.

Combining the first time buyer property investor data from our surveys, we see a spike in overall first time buyer activity.

Last month, around 1,100 more first time buyers entered the owner occupied market than the prior month (12%), and around 150 more in the investment sector.  We also saw a rise in the fixed rate loans, as borrowers try to lock in lower rates ahead of expected rises.

So overall, still strong momentum in the housing sector, and powered largely by an overheated investment sector.


Housing affordability is in dire straits

Good article from Julia Corderoy,

THIS map is a homebuyer’s worst nightmare.

It is no secret that housing affordability in many parts of Australia absolutely sucks, especially in Sydney. And it looks like it’s getting worse.

Since 2009, house prices in the Harbour City have almost doubled, rising by 97.5 per cent, according to CoreLogic data. In 2016 alone, Sydney property prices jumped 15.5 per cent.

“Sydneysiders saw dwelling values increase by approximately $10,000 per month over the past year, creating a significant boost in wealth for homeowners; at the same time we’ve seen mounting affordability challenges for aspiring homeowners,” CoreLogic head of research Tim Lawless said.

But new graphs released by the data company show in graphic detail just how hot the property market has been and how many areas have been affected.

The number of Sydney suburbs where house prices are now at least seven figures is astonishing and depressing. Graph: CoreLogic. The red in the graph illustrates suburbs where the median house price is $1 million or above. In December 2011, the red was concentrated in those suburbs within 10km or 20km of the CBD, as you would expect.

Six years ago, only two suburbs outside of a 50km radius of the CBD had median prices of at least seven figures. Most of the graph is coloured bright green or pale green, indicating median house prices of a substantially more acceptable $300,000 to $500,000.

Juxtapose that against December 2016 and the realisation is terrifying. Red is the dominate colour and many suburbs more than 50km from the city have crept into the red zone.

Those green suburbs with homes of $500,000 or less are almost exclusively located in fringe suburbs more than 50km from Sydney’s centre.

Not depressing enough? Buying an apartment isn’t necessarily that affordable now either. In this graph, which compares house prices to apartment prices in Sydney, it shows a considerable number of suburbs more than 10km from the CBD that now have apartment median prices of $1 million or more.

Even the number of suburbs where apartments are reaching $1 million is astonishing. Graph: CoreLogic.

Some suburbs more than 20km outside of the city centre even have apartments with price tags of at least seven figures. In fact, buying an apartment in 2016 doesn’t look dissimilar to buying a house in 2011 — and that’s just a difference of a bit over five years.

Another recent CoreLogic report put Sydney house prices at a whopping 8.3 times higher than annual household incomes and found households were dedicating an average of 44.5 per cent of their income to service a mortgage.

Broadly, a homeowner is considered to be under “mortgage stress” if they have to devote more than 30 per cent of their household income to repayments. So Sydneysiders are paying 1.5 times the amount already considered as being under “mortgage stress”.

But even being able to pay a mortgage on a Sydney home is a luxury, considering high prices are locking people out altogether as they struggle to save the deposit. To secure a mortgage and avoid Lenders Mortgage Insurance (LMI) you need to save a 20 per cent deposit.

This means, according to a recent Bankwest report, the average Sydney couple faces a gruelling 8.4 years of saving to front the deposit on a median-priced home.

Nationally, the average Australian couple spent 4.4 years saving up for a 20 per cent deposit to buy a median-priced house in 2016.

It isn’t just a Sydney problem either, albeit it is the worst in the New South Wales capital. In Melbourne, where house prices rose 13.7 per cent in 2016, prices have increased by a mammoth 83.5 per cent since 2009.

And when it comes to saving a deposit, Melburnian couples aren’t far behind Sydney. They are scrimping and saving for an average of 6.2 years to afford a deposit on a median priced home.

Even house prices in our nation’s humble capital of Canberra have risen by a third (32.6 per cent) post GFC, and 9.3 per cent over the past 12 months.


There has been plenty of debate about the future of Australia’s house prices, particularly in notoriously hot Sydney and Melbourne, and whether it is time for some reprieve. What goes up must come down, right?

Monthly CoreLogic data has shown the rate of growth is easing. The annual rate of capital growth in Sydney, for example, has eased to 15.5 per cent as at December 2016 from its cyclical high of 18.4 per cent annual growth recorded at the end of July 2015.

However, according to research from HSBC released this month, Sydney and Melbourne house prices will rise “solidly” again in 2017.

The bank’s view is that capital city house prices will rise a further 3.4 per cent in 2017 before easing to 1.7 per cent in 2018. And this is in a year in which it expects the Reserve Bank to lift interest rates by 50 basis points to a 2 per cent cash rate.

But while house price growth will remain strong in 2017, HSBC chief economist Paul Bloxham noted the housing construction boom was “now near its peak” with significant falls in building approvals in recent months indicating an impending downturn.

He said we can expect construction will start to drop in late 2017.

“Like ships passing each other in the night, we expect housing construction to start falling around the time that mining investment stops its decline,” Mr Bloxham wrote.

“Australia’s investment outlook is then expected to be supported by mine maintenance and repair, infrastructure investment and the business investment needed to support services exports, such as tourism and education — Australia’s next growth engine.”

HSBC’s forecasting says investment in housing will serve a positive contribution to Australia’s GDP in 2017, with a predicted 4.4 per cent in the year — following a 9 per cent gain in 2016 — but will then fall 5.7 per cent in 2018.


So perhaps the collective complaint from millennials that it is much harder to get on the property ladder now than ever before shouldn’t be dismissed so quickly by their Baby Boomer parents as nothing more than a whinge.

According to the latest edition of the Adelaide Bank and Real Estate Institute of Australia (REIA) Housing Affordability Report, released in December, the average loan size to first home buyers increased by 1.5 per cent over the September quarter, to $319,633, thanks to ever-rising house prices.

First home buyers now make up just 13.2 per cent of the owner-occupier market nationally. This is the lowest representation since the Australian Bureau of Statistics (ABS) series was commenced in June 1991 and compares to the long-run average of 18.5 per cent.

All states and territories but two — Queensland and the Northern Territory — recorded decreases in first home buyers over the September quarter 2016.

Speaking of the results, Damian Percy, general manager of Adelaide Bank, likened this dwindling group of buyers to an endangered animal.

“The number of Australian first home buyers decreased by 6.7 per cent during the quarter, to 21,825 — a decline of 5.8 per cent compared to the September quarter 2015. To give this some sense of perspective, the number of first home buyers for the quarter has dwindled to a figure now equivalent to the number of lions believed to be left in the wild,” he said.

And it’s a group of lions which desperately needs to be saved from a bleak future.

“Home ownership is the third leg of the stool — along with superannuation and affordable healthcare — that enables people to enjoy a secure and dignified retirement. It is to be hoped that real solutions will emerge to the affordability issue from this gathering of treasurers, and not just agreeance to keep having more meetings.”

The rest of CoreLogic’s report, which graphs Australia’s other capital cities, will be released in the full report later this month.

WA unveils boosted first home buyers grant

From Australian Broker.

The Western Australian government has announced a temporary boost to its long standing First Home Buyers Grant, increasing the total amount from $10,000 to $15,000.

The boosted payment will apply to contracts entered into between 1 January and 31 December next year for the purchase or construction of a new home. Builders who lay the foundations for their home between these dates will also be eligible.

“Homes must be completed within certain timeframes. If you enter into a contract to build a home, construction must start within 26 weeks from you signing the building contract, and the home must be completed within 18 months after construction commences. If you are an owner builder or purchase a new home ‘off-the-plan’, including apartments, construction of your home must be completed by June 30, 2019,” said WA Finance and Small Business Minister Sean L’Estrange.

However, the focus on newly constructed homes may inadvertently affect the state’s property market, said Hayden Groves, president of the Real Estate Institute of Western Australia (REIWA).

“As an institute we’re a little concerned that the gap between established property and new property for first home buyers is getting larger,” he told ABC News.

“$15,000 is a significant amount of money. Established property in areas that are traditionally first home buyers territory will no longer be as appealing, or even less appealing as they already are, and it will therefore add to additional supply onto the market, which you can argue we probably don’t need in this current market cycle.”

Groves suggested the government also offer the same incentive to first home buyers who eventually purchase existing homes as well.

“The positive side of it is it does bring more buyers into the market and so you do end up with more activity,” he said. “Over time the first home buyer becomes the secondary buyer.”

“But certainly the immediate impact could be a downward pressure on the median house price in Perth.”

Premier Colin Barnett was more optimistic, saying the measure would stimulate the state’s property market by allowing more first home buyers to enter.

“We are conscious about housing affordability and this boost will provide more families an opportunity to get into the housing market,” he said.

He expected an additional 650 first home buyers to buy or build a new home in Western Australia as a result of the boosted grant