According to some real estate agents, if the Federal Government ends the First Home Owners Grant on June 30 2009, the real estate industry will grind to a halt.
Remax real estate agent Peter Secco has been working in my local area for 25 years. He’s seen property prices and the industry go up and down, and he says that things won’t be good if the bonus grants for first-time buyers – $14,000 for established properties and $21,000 for new properties – is ended.
“I cannot stress how important first-home buyers are to the overall health of the property market as well as to their local economies,” he said. “The property market is like a ladder. You can cut off the top of the ladder and it still stays up. But if you cut off the bottom of the ladder, the whole thing comes crashing down.”
– Remax agent Peter Secco in the Brisbane Times
His Remax office has sold 37 properties in 2009, but only 2 of them sold for more than $500,000. Some agents have been more successful, achieving repeatedly good sales for top end homes. However, most are saying that the bottom of the market is where all of the action is. People who have been renting for years, unable to enter the property market due to rising property prices and high interest rates, are suddenly making the jump, which is also leading to higher vacancy rates in rental properties. Investors are also being attracted back to real estate, lured by the opportunity to pick up a bargain. However, property investors will need to be cautious, as the first home owners are moving out of their rental properties and this is starting to drive down rent prices.
Will the Federal Government continue with their First Home Owners Grant beyond June 30?
Yes, I think they will. They’ll have to, if they want to be seen to be doing all they can to keep unemployment as low as possible. However, I think they also need to maintain the illusion that the First Home Owners Grant could end in a few months time, in order to keep things moving now. If they announce a continuation of the scheme too early, then people will slow down their buying / building activities, which would also have a negative effect on the real estate and home construction industries.