(03) 9020 2905Woo-hoo! The end of the “boost” portion of the first home buyers’ grants can’t come soon enough. Like the last mouthful of an unpleasant dinner when you know there’s a great dessert to come.
Cash incentives to buy are a false economy for home buyers – they will pay more for their property. Therefore, the benefit of the incentive goes straight to the pockets of property sellers, including developers.
The grant was designed to stimulate buying, to stop property prices going into freefall.Aided by low interest rates, the plan has succeeded.
Buyers wanting the grant will pull forward their buying intentions. It is logical, therefore, that there could be a buying vacuum early next year.
My inkling is that Gen Xers looking to purchase investment property will get great opportunities presented early next year, when the bonus portion of the grant has been removed.
That may well coincide with interest rate hikes and unemployment rising further.
What it means for property investors depends on what sort of investor you are. If you’re a seller, then the staged removal of the bonus grant might make you nervous. If you’re a buyer, then time could well be on your side.
And, as always, buy-and-hold investors with a 10-year plus timeframe have no great need to worry.
But there’s no guarantee the “boost” will go. I’ll believe that when I see it.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser.