Queensland’s First Home Owners Grant: Market Implications

When you have:

a) overwhelming demand for houses,
b) nowhere near enough being built, and
c) political pressure to make house prices more affordable for first-home buyers …

What do you do?

The answer is simple.

You have to give first-home buyers some kind of advantage over the rest of the market. Otherwise, they’ll be locked out forever.

This is exactly what the Queensland government has done.

And it’s a frank admission from the government that house prices aren’t coming down.

Not soon. Not ever.

For a long time now there’s been a huge push to try and get house prices down for first home buyers.

But that horse has bolted. And so the strategy is no longer about getting the price of houses down.

It’s about giving first-home buyers another way into the market.

And give them a fighting chance of getting in against cashed-up buyers, particularly seasoned investors with equity or cash behind them.

So to swing the pendulum away from investors and back to home buyers, they have doubled the first homeowners grant to $30,000.

That’s triple the amount on offer in NSW and Victoria.

And in a rare sign of solidarity in hard times, even the opposition leader agrees, calling it a “step in the right direction”.

Here’s where it gets really interesting

Interestingly, it’s not just on offer for the usual suspects including houses, units, duplexes and apartments.

It’s also an offer for granny flats built on a relative’s home, relocated homes, kit homes and even homes in manufactured home parks.

In other words, they want first-home buyers to ‘think outside the box’ and build where nobody else is building. Especially for projects which are less labour-intensive so they don’t suck resources out of other building projects.

Or to put it another way, if you build a ‘granny flat’ in Mum and Dad’s backyard, the government will chip in $30,000.

And between the lines, we’re reading …

“Please build, pretty please start building. For goodness sake … we’re drowning here.”

It’s a shrewd move by the government which is under pressure to meet their quota for Australia’s new 240,000 house target.

Opportunity for first-home buyers and first-time investors

If you’re a first home buyer with plans to invest, this is a once-in-a-lifetime opportunity for you. This is because you can get into the market right now with a surprisingly low contribution.

We ran the numbers on an inexpensive first home in Queensland and this is what we came up with. I By combining the First Home Owners Grant with the First Home Guarantee Scheme (FHGS), it's possible to acquire a home with a contribution as minimal as $27,000.

The First Home Guarantee enables first-home buyers, even with deposits as low as 5%, to qualify for a home loan without incurring Lenders Mortgage Insurance (LMI) fees.

new-home-brisbane-chart-22-11-23

Is there a catch?

Of course.

But it’s very minor.

Essentially you have to live in the house for 6 months.

And you have to be aware of a few other conditions around the scheme, and the first home concession and first home vacant land concessions.

However, for first-home buyers in Queensland who also want to build wealth, using the grants currently on offer could give you that vital first onto the ladder.