The Tasmanian Government will scrap its First Home Owners Grant for established properties and wind down a boosted incentive for new builds, as part of its frugal 2013 Budget.
The government believes it can get the balance sheet back in the black in four years’ time, despite recording a record deficit this year of $425 million.
In handing down the State Budget yesterday, Premier Lara Giddings outlined her plan to carve a path back to a surplus.
Two cost-saving measures include the abolishment of the First Home Owners Grant, a $7000 bonus for purchasers of any property, and the winding back of the $8000 First Home Builder Boost for new dwellings.
They’ll both be replaced by a single $7000 grant for first-time buyers of a new home only. The change comes into effect from July 1.
The Mortgage and Finance Association of Australia (MFAA) slammed the move, describing it as “a disaster for Tasmanian young homebuyers trying to break into the property market”.
The body’s state president, Bryce Harding, believes the grant rejigging is a “poor decision” made purely to help balance the books.
“Not all first homebuyers can or want to build their own home and this decision will make it even harder for young couples and single people to put a roof over their heads and plan the future,” Harding says.
Giddings blamed the state’s ballooning debt on GST revenue losses, downgraded state taxes and the bill for disaster recovery in the wake of the devastating January bushfires.
The only other piece of housing-related news was an additional $500,000 in funding to continue a major overhaul of the state’s planning system.
Reforms focus on reducing costs and breaking down barriers to development and boosting housing supply, Minister for Planning Bryan Green says.
“These reforms will minimise costs for builders and developers by increasing the consistency, clarity and certainty in the planning system,” Green believes.
This new funding will enable the Tasmanian Planning Commission to push through its assessment of revised planning schemes, he says.
Despite its debt burden, the government’s election year fiscal plan includes funding contributions towards the Federal Government’s major education reforms and the DisabilityCare insurance scheme.
There will be a renewed emphasis on jobs in the year ahead, the government says, as Tasmania continues to battle a stagnant economy and rising unemployment.
“(The Budget) provides funding for a range of initiatives in the Tasmanian Jobs Package, as well as the first increase in the payroll tax threshold since 2000 and grants for businesses that create jobs through innovation and investment,” Giddings says.
There’s funding for new infrastructure in the areas of health, education and irrigation, she says.
While Giddings says “continuing financial discipline” will be the medicine that cures the Budget’s widening debt black hole, projections for a surplus in 2016-17 are based on what commentators have described as overly optimistic growth forecast.
The government forecasts trend economic growth in 2013-14 will be around two per cent.
Recent Australian Bureau of Statistics (ABS) figures show first homebuyer numbers in Tasmania rose 18.8 per cent for the 12 months to July 2013.
Tasmania’s Acting Treasurer Scott Bacon says the results are encouraging for the property sector.
“First homebuyers purchased 1480 homes during that period and the average first homebuyer’s loan is now $209,000.”
This is opposite to the national first homebuyer result, which fell 11.2 per cent over the same period.
The ABS also reports the trend number of Tasmanian housing finance commitments grew in line with the national average of 1.6 per cent from June to July 2013.
Bacon says there are a number of factors influencing the positive results.
“The first home builder’s grant to stimulate the building industry, combined with lower interest rates, is leading to an improvement in economic activity.”
Rob Zubin, principal and managing director at vendors’ advocacy My Property Hunter says he’s seen more activity from first homebuyers at the ground level.
“I have noticed in the well priced suburbs first homebuyers are being attracted into the market. It’s been noticeable.”
Zubin says although grants have had some impact, the overriding factors are low interest rates and affordable property prices.
“Some first homebuyers just see it as a good opportunity to buy a well priced property, and rates are cheap.”
“We’ve had renters who haven’t purchased a home and they’re deciding that now is a good time to spread their wings and move out into the market place.”
Zubin says it’s a smart move by astute first-time property participants.
“They haven’t experienced rates at eight or nine or 10 per cent. A lot of them are young, probably less than 25 (years of age), who are entering that market so everything looks good.
“If they can establish themselves while rates are low and pay off some of that home loan, they’re probably setting themselves up to be in a pretty good position.”
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