With rapidly rising house prices, years of stagnant wage growth and the struggles of saving for a loan, recent debate has pointed to the end of home ownership and with it, the ‘great Australian dream’ for the next generation. This has not stopped young Queenslanders defying the odds, with recent figures from the Australian Bureau of Statistics showing that for many, this dream is still alive.
Over 2200 first home buyers entered the Queensland market in June, 2017 marking the highest monthly total in eight years, since the Rudd Government’s GFC stimulus scheme saw first home ownership spike in October 2009. The Queensland Government has since implemented a similar scheme to encourage more people to enter the market and argues that a recent increase in the value of the First Home Owners’ Grant has spurred this increase in first home buyers.
State Labor Candidate for the seat of Everton, David Greene, says his party is committed to helping first home buyers and have clearly done so through a recent boost to the First Home Owners’ Grant which means that Queensland now has the most generous state-wide grant of all the mainland states.
“The Palaszczuk Government recognises how difficult it is for first home buyers to get into the housing market. That is why the government temporarily increased the First Home Owners’ Grant from $15,000 to $20 000 on July 1 last year,” he said.
This $5 000 boost, which is only available to be used on new properties, was due to end in July 2017, but was recently extended to the end of the year. “The 2017-2018 Budget contained additional funding of $30 million to extend the boosted grant offer for a further six months, to give first home buyers until December 31, 2017 to access the Government’s generous incentive,” Candidate Greene added.
Cat Milton, a Spokesperson for the Queensland Treasury Department said the decision to extend the boosted grant came after success in its initial period. “The response to the temporary boost has been pleasing, with a 36.1% increase in the number of Queenslanders receiving a First Home Owners’ Grant payment between the 2016-2017 period, compared with 2015-2016,” she said.
Owing to this grant, Queensland continues to solidify itself as the country’s leading performer when it comes to first home ownership, with all other states except Western Australia, continuing to face significant long-term declines in the number of first home buyers entering the market.
In the first six months of 2017, Queensland experienced a 13% surge in the number of first home buyers, compared with the same period last year. These results easily outperform other Australian states, particularly those down south. Both Victoria and New South Wales reported declines of over 5% in this period, with the number of Tasmanian first home buyers plummeting by 15%.
CEO of the Real Estate Institute of Queensland, Antonia Mercorella attributes the strong numbers and growth in Queensland to more than just the boosted grant, but also the state’s reasonable housing prices, particularly when compared to Victoria and New South Wales.
“Whilst property prices have rocketed away from earning capacity, leaving home buyers struggling to save for a deposit in the southern states, the situation in Queensland is very different,” she said.
“Queenslanders have many opportunities to get their foot on the property ladder. In greater Brisbane there are more than 100 suburbs with a median house price at or around $500 000 and this is considered affordable.”
This is reinforced by the fact that the average home loan size for first home buyers in Queensland is significantly less than that of other states. In June 2017, the average size of a Queensland first home buyers loan was $293,100, significantly lower than $371 900 in New South Wales or Victoria’s $330,200.
Professor Bill Randolph, Director of The City Futures Research Centre at the University of New South Wales, agrees that lower house prices in Queensland have given first home buyers an edge over buyers in the southern states, but has reservations on the heavy use of the First Home Owners’ Grant by state governments.
Whilst he agrees that the scheme has had value as a short-term demand stimulant to bolster overall housing consumption, he believes it is a waste of money in the longer term. “The scheme simply gets washed out in marginally higher property prices and brings forward first time buyer purchases that would be made over a longer period, leading to an inevitable slump in buyers to follow,” he said.
“There are much better ways of spending public funding to make housing more affordable, but the First Home Owners’ Grant is popular with politicians as a vote winner,” he added.
As both major parties prepare for the Queensland state election in 2018, this issue will be important, in targeting younger voters. With the current extension to the boosted First Home Owners’ Grant due to finish at the end of the year, it is yet to be seen whether early election promises will see the grant once again extended, helping Queensland to continue experiencing first home owner growth.