Despite the First Home Owner Grant only being in place for those who choose to purchase new builds, more first home buyers are choosing to buy established properties rather than build new.

Research conducted by the Real Estate Insitute of Western Australia (REIWA) shows the number of first home buyers purchasing an existing property increased by 20 per cent between the December 2017 and 2018 quarters.

REIWA President Damian Collins says the WA First Home Owner Grant "unfairly penalises buyers wanting to purchase established properties by only providing assistance to those who choose to build".

"Initially, this had the effect of skewing first home buyer preferences towards new builds, but it appears more first home buyers are choosing to forgo the grant in favour of purchasing an existing property in an established suburb," Mr Collins said.

He says it's not fair that first home buyers are missing out on the grant simply because they don't want to build a new home.

"Or even worse, it means some first home buyers who want an established property are unable to enter the market.

"Housing affordability remains a significant hurdle for many West Australians and we should be encouraging and incentivising all first home buyers to enter the market, not just those who choose to build their first home,” Mr Collins continued.

Mr Collins said the government should extend the grant towards eligible first home buyers who want to purchase an established residential dwelling.

“Increasing the demand for established housing will have a knock-on effect to other areas of the market. This would allow more WA households to right size into accommodation that suits their changing needs, resulting in more transfer duty revenue for the state,” Mr Collins said. 

“First home buyers have consistently shown they prefer to buy established homes. The WA Government should respect the preferences of first home buyers by not discriminating between established and new build properties, enabling more West Australians to make the dream of homeownership a reality.”

Managing Director of Realmark Coastal, Sean Hughes agrees.

"I think the First Home Owner Grant shouldn't discriminate who and how it goes out. It simply should be what it states - a "first home buyers grant" for any first home buyer, regardless of what they buy under the cap," he told WILLIAMS MEDIA.

"The government now needs to balance the market back out"

Realmark Coastal sales associate Paul DiLanzo says the grant has skewed the market.

"First home buyers may be targeting established property more because there is far better value in buying established compared to new right now, which far outweighs the value of the grant.

"The First Home Buyers Grant, when changed to new properties only, left a void of buyers which in my opinion, has left the new market artificially inflated compared to the established market.

"Since the grant changed, which pushed buyers towards new properties, you will find that established lower-end properties have suffered large falls in price. This is because many first home buyers and investors that had previously purchased new or established properties prior to the change are now in negative equity because the market was forced to skew downwards because buyers abandoned that segment of the market in favour of new," he told WILLIAMS MEDIA.

Mr DiLanzo says builders and developers didn't need to reduce their asking prices as much because of the lure of the grant, but established sellers had to make large price reductions.

"In 2014 you could sell a brand new or established one-bedroom apartment around the CBD for between $420-$480,000, but now those same properties are selling for between $300-$350,000.

"In some newer subdivisions, you paid around $550-$600,000 for a house and land package in 2014, but the resale value of the home is in the $400,000 range. 

"Builders and developers have now had to get clever by offering more affordable house and land packages to keep buyers buying, and the price has become so competitive, even for them," he said.

"The government now needs to balance the market back out by introducing the grant back to both sides of the property market. It's not right to support one side and not the other."

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