First Home Owners Grant

[bluelabel]

All this talk about the FHOG being reduced, or brought back to the original amount, got me thinking and it is now being talked about on 774 with Lindsay Tanner.

I believe that the extra $7000 offered in the FHOG is artificially propping up the "first home buyers market". i.e. that from around $200k to $450k.

My wife panicked yesterday when she found the extra grant was being withdrawn but I told her not to worry as the market should level out or even drop after June when the FHOG bonus is withdrawn therefore negating any extra benefit of receiving the $7000 would have given.

:bier:

blue

[nicole]

I am an investor and a real estate agent as well, working for an agency who sells property all over Queensland. I do believe the prices for established homes will fall after June, but there is a likelihood that they will keep the grant for construction of new homes. In many places constructing a new home does not cost much more than buying an established home. And the government might want to prop the construction industry further with the grant for newly built homes. They urgently need to build new homes, as there is such a shortage of homes, especially in Queensland.

But I can tell you honestly, there are much fewer calls from buyers wanting to buy properties, though we have about 30 listings compared to last year. It's rather very quiet. Also, a number of people have not been able to get their loans approved lately to buy because the banks have been tying up their lending policies, and the grant does not impress the banks, is your ability to earn an income and your history of a steady income that they look for much more.

If you can get pre-approval on your finance it will be very useful, if you want to buy. It will create confidence with the agent who is trying to sell that you are able to complete the contract of sale.

But I do believe that the prices will go down after June, and have started already. There ae many properties on the market, but not many buyers. Anything over $500,000 takes a long time to sell.

After the grant is taken away, there will be even less buyers, so the market will go down. This combined with lots of unemployment, it will cause the property market to go down. They are predicting 800,000 jobs lost by June 2010, which again will affect the property market. Rudd is also setting up deals with the banks to ensure that if people are unemployed, they won't have to pay the mortgage for one year without defaulting on their loan. Why do you think he is taking such preventative measures if everything is going to be just fine in the future?

I have a friend who is a real estate agent for Ray White in commercial real estate. He told us that he gets one email every 3 days from his clients saying that they have lost their jobs. There has been a good number of developers who have gone banckrupt in the last 1-2 years.

A few of the job agencies I have contacted have told me that they have an overwhelming number of applicants for jobs and obviously only those wit the strongest skills and experience get the jobs.

So, considering all these factors, plus the weakness of the world economy, I cannot see how the property market will go up or stay the same.

By the way, I wrote an article to help buyers with the process of buying property at http://www.happeningrealestate.com.au/things-to-consider-when-buying-a-home . Check it out, it might help make your buying experience simpler and more enjoyable.

If you have any questions, feel free to contact me.:)

Marilena Fackerell

[kincella]

Nicole...two very good posts...I am a boomer with props down on the nsw/vic border...I will be surprised if the lower end props go down any further...they were selling all the very low priced ones up until Oct 08, then they ran out of that stock and started buying the 500k + range.....most of the mid 350-450 were not on the market....
I saw a load of stock come onto the market....agent I deal with said the investors were offloading to the fhb's....they were being enticed to sell....
I was thinking about a house...twas very cheap....but I missed it....I have not seen comparable props since....
most of my frineds and associates are boomers....we have multiple props...waiting for the rates to go down and lock in...and we will be out buying again...
I have just refinanced....the values came in ridiculously low,,,,the banks are taking 8 weeks to do the paperwork....last week I was offered 5.49 fixed for 5 years....this week they want 6.49 and more than half locked in...so I said ...no...I will take all on variable at 5.20.....
do not know who to believe...are the banks raising the fixed rates to scare the newbies ??? into buying up before June....
article yesterday suggested more rate cuts...and bank competition will see hardly a difference between fixed and variable.....thats the deal I am punting on....about 5% would be good....
cheers

[kincella]

I forgot to mention....I think QLD and WA...actually all other states except NSW and Vic are still a bit over the top....and those states were more reliant on resources than Vic....
I am expecting the boomers and expats etc to take up the slack if the fhb's are finished....
also intending to do some reno work on one property....thats if the tradies can handle it...not a 4 month wait to start as per the past 10 years...
its as cheap now to buy as it was to rent....so if they keep their jobs they should be fine.....
apart from that its getting boring IMO....its almost 2 years since this thing really got started....
I have at least 30 years in retirement that will need funding....so its more houses...and I will go back to part time work if I have to....am semi retired...
cheers

[bluelabel]

The FHOG boost is earmarked to be reduced in September 2009. It will be cut in half, so a first home buyer will now be eligible to receive $10500, made up of $7000 grant and $3500 boost.

Not a bad result really considering that the entire boost was scutlebutted to be axed.

:bier:

blue

[bluelabel]

Found this article in the Australian this morning. First-home buyers borrow big (http://www.theaustralian.news.com.au/story/0,25197,25532509-601,00.html)

It supports what we have been thinking for a while now. The first home buyers end of the market is artificially inflated. It also goes on to say that there is opinion around that people buying in this low end of the market are buying into a bubble that is nearly ready to busrt.

It goes on to say that there are lenders still handing out sub prime mortgages here in australia. :banghead: Interesting, some people will never learn...

I say hang on to your cash for another 6-12 months and see if it does pop, if so there could be some very nice bargains about.

:bier:

blue