Slowdown in first-time home buyers

New figures suggest Western Australia’s first-time home buyers could be dropping off, in the wake of changes to the government’s incentives scheme.

Data for August released by the Office of State Revenue show applications for existing homes were down 28 per cent on the previous month, to 833 – the lowest level since June 2011.

Applications for new homes were down 42 per cent from the recent peak in May, to 614.

There was also a notable fall in the number of grants paid for established homes, reflecting the changes made last September to only offer $3,000 for first-time buyers purchasing existing homes.

Real Estate Institute of WA head of research Stewart Darby said the slowing in first home buyer activity in the established market, and a subsequent shift to new building, was not unexpected.

“However, based on application data, it would appear the desired impact of changing buyer preferences to new builds may be short lived,” Mr Darby said.

“By way of numbers, the substitution to new dwellings is reflected in the shift in grants paid in recent years.”

Mr Darby said in June 2012 the ratio of established to new grants paid was 76 to 24, which shifted to 73 to 27 in the same month in 2013 and changed to 62 to 38 in June this year.

The slowing activity will not, however, show up in finance data, Mr Darby said, which lag grants data by a month.

“Despite the downturn in FHOG data, WA remains the national first home buyer powerhouse based on analysis of the finance data,” he said.

“WA has consistently maintained a first home buyer loan share to new loans, excluding refinancing, above 30 per cent since late 2011.

“This compares with the dramatic declines in both NSW and Victoria, which have felt the effects of changes to both FHOG and transfer duty relief.”