It happened last time and it's happening again now.
In Victoria and NSW the introduction of First Home Owner concessions like stamp duty cuts is bringing young buyers back into the market.
And this is good news as they're taking over form investors, who are generally looking in the same price bracket, but are currently fewer in number as they're having difficulty getting finance thanks to the lending changes brought about by APRA.
The latest Australian Bureau of Statistics Housing Finance figures (for July 2017 - the first month that the incentives came into effect) show an increase in first home buyer activity.
In N.S.W. there was a significant increase in number of first homes financed in July was 1,950, which was up 28% from the June figure of 1,528.
The proportion of the market comprising first home buyers was 11% – up from 9% in June, but this is really still a far cry from the long term average of 17% of the market being first home buyers in NSW.
Things were a little better in Victoria - probably because of it's high population growth and lower prices.
The number of first homes financed in July was 2,619 – up 11% on the June 2017 figure of 2,366 homes were financed.
First home buyers made up 17% of the Victorian marketplace, up from 14% in June and heading towards the long term average of 21%.
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What are the First Home Buyer incentives?
- No stamp duty on first home purchases up to $600,000 for both new and existing properties
- Stamp duty concessions on first home purchases up to $750,000 (both new and existing)
- First Home Owner Grant (FHOG) doubled to $20,000 for regional buyers who build or buy a brand new home up to $750,000.
- FHOG of $10,000 for available to buyers of new properties in Melbourne
- No stamp duty on first home purchases up to $650,000 for both new and existing properties
- Stamp duty concessions on first home purchases up to $800,000 (both new and existing)
- Buyers of brand new properties also receive a $10,000 grant for homes up to $600,000
Then there is the Federal Government’s new First Home Super Saver Scheme which also commenced on July 1.
This enables first home buyers to make voluntary contributions of up to $15,000 per year into their super (up to an overall total of $30,000) to save for their first home.
These contributions are taxed at the usual super rate of just 15% and can be withdrawn from July 1, 2018, along with any earnings, to buy a first home so of course these measures won't affect the market any time soon.
Our markets may be down, but they're not out.
While investor interest remains high, many are having difficulty getting finance, but First Home Buyers are back int he market propping up the sub $700,000 market