The new Labor state government needs to urgently increase the First Home Owners Grant for established homes to $15,000 according to Shane Kempton, CEO of Professionals.
Kempton said that the Western Australia property market was currently distorted because the FHOG only applied to new homes.
“This distortion has resulted in property prices for established homes in newer suburbs actually falling because established property owners in these areas have had to discount their selling price to match the $15,000 FHOG that applies to new homes.
“The Labor Party received a huge number of votes in these newer outlying suburbs of Perth in the state election, and they should reward property owners in these areas by extending the FHOG to established homes.
“It actually makes good financial policy because when more first-home buyers purchase established properties, it means that the owners of these properties can upgrade to newer established homes and this will generate additional stamp duty collections for the State Government.
“At the moment, many newer established property owners are gridlocked in the property market because they cannot upgrade due to the fact that potential buyers are choosing to build new homes due to the $15,000 FHOG that applies to new builds only.
“The only way they can sell their property is to reduce the selling price of their home which could be difficult because they could be in a negative equity situation due to Perth’s falling property values.
“By increasing the $15,000 FHOG to established homes, it will give a major kick start to the Perth property market and this inturn will help the rest of the economy as consumer confidence will begin to rise,” he said.
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