In February there was a total of 2,153 grants given to first home buyers, compared to 3,324 in February 2010 and 3,115 in February 2009.
It is also well below the recent peak of 4,981 in June 2009.
Analysis of the data provided by the Victorian Government confirms that first home buyers respond well to financial assistance. When the numbers peaked in the middle of 2009, interest rates were at historical lows, prices were lower than they are now and first home buyers were eligible to receive $17,000 towards an existing home and up to $26,000 for a new home in the metropolitan area.
Now first home buyers are eligible to receive $7,000 towards an existing home and up to $20,000 for a new home in the metropolitan area.
This underscores the importance of helping first home buyers.
Like many first home buyers, the REIV is looking forward to the middle of the year when the state government is expected to deliver on its promise of a 20 per cent cut in stamp duty.
Once this is implemented it will provide a $6,232 saving to a first home buyer of a median-priced house; and on a home priced at $400,000 the saving would be $3,274. This is not close to what first home buyers could receive in 2009 but it is better than the current scenario if you are buying an existing home.
Direct financial assistance is one way to help first home buyers, the other way is to increase the supply of new homes. Increasing supply would not only help meet our growing population’s housing needs but also ensure price growth is moderate and, as a result, help keep housing affordable.