Government Assistance Schemes: a great time for First Home Owners
Good news: It’s a very positive time to get into the housing market!
Firstly, according to the Reserve Bank, interest rates are likely to stay at historically low levels for the next three years.
The prediction came from Reserve Bank governor Philip Lowe after the RBA board decided on 6/4/2021 to keep the cash rate at a record-low 0.10%.
Governor Lowe said in a statement there would be no increase to the cash rate until inflation (currently at 0.9%) is sustainably within the target band of 2-3% - which is not expected until at least 2024.
RBA's Philip Lowe's announcement is good news for first home owners. (Image: ABC News: John Gunn)
“For this to occur, wages growth will have to be materially higher than it is currently,” he said in the statement. “This will require significant gains in employment and a return to a tight labour market.”
These sentiments are reflected in the current market. First-time buyer new loan commitments made up 26.2 per cent of last April’s near-35,000 monthly loans, more than investors’ 25.6 per cent - and have continued to grow since then.
The latest figures for January give first-home buyers a 30.9 per cent share and investors just 22 per cent.
Assistance to get that First Home
First home buyers should also be aware of two opportunities that’ll help them get into the market:
- First Home Owner Grant
You may qualify for a $10,000 grant under the First Home Owner Grant (New Homes) scheme.
The grant is available for:
- A contract to buy a new home
- A building contract by the owner of the land
- The owner of the land building their own home.
To qualify, the purchase price of your new home must be no more than $600,000 (where the commencement of the eligible transaction is on or after 1 July 2017).
If you’re buying land to build a new home, the total price – including the land and home – must be no more than $750,000.
- First Home Buyer Assistance Scheme (FHBAS)
If you’re a first home buyer, you may be entitled to a concessional rate of transfer duty or even an exemption from paying it altogether under the First Home Buyers Assistance scheme (FHBAS).
Unlike the First Home Owner Grant, the FHBAS applies when you’re buying:
- an existing home
- a new home and
- vacant land on which you intend to build a home.
The NSW Government applied increased thresholds for purchases of new homes and vacant land to build a new home from 1 August 2020 to 31 July 2021. The threshold for existing home purchases remains unchanged.
You can check out the new thresholds here: