The current economic condition of Australia and the struggling performance of the West Australian Property market since its hay days of the mining boom have now potentially seen an increase in demand for home buyers eating up the governments new home buyer incentives. West Australian home values have seen the booms and bust due to the decrease demand from a reducing population as the demand for mining jobs fell off a cliff after the mining boom and construction phase ended, meaning thousands of workers were moving back to their home states in Australia.
Many families and investors would have reaped the benefits of owning during the early 2000’s but some who bought after the boom will still be feeling the hurt of a home or investment that’s left them with high loan to value ratio’s and potentially some home or houses worth less than purchase price.Hopefully this is the end though, with incentives from the government at state and federal level now imposing new building grants and the increase in mineral resource prices leading to an increase in demand for skilled workers in WA, an improvement in home values and increase in rent is starting to be seen in certain areas around Perth. WA has had the last 10 years to absorb the supply of extra vacancies since 60,0000 people left WA after the mining boom. The average vacancy rate was over 5% and has dropped to nearly 2% in certain areas.
The mining boom started in early 2000’s and ended nearing 2015, as you can see the rental prices and vacancies tell the story and hurt to some home owners and investors.
West Australian Building Bonus Grant Construction Grant:
The west Australian government has made available to people who enter into a contract to build a new home $20,000 dollars if you enter a contract between 4 June 2020 and 31st December 2020 to build on vacant land/ purchase a new home being constructed under a single tire development (not apartment buildings) or on a strata plan and other land survey (new home and land package/ house or unit). There is no cap on the purchase price or value of the contract. The construction must start within 6 months of the contract and there must be evidence (large earth works or excavations or physical buildings. https://www.wa.gov.au/service/community-services/grants-and-subsidies/apply-new-home-construction-grant
First Home Owner Grant: FHOG
This is a one-off payment to assist people in buying or building a new house for their residence. The payment is $10,000 dollars and can be claimed within one year of settling the contract yourself or through your building agent. The grant is only eligible for the purchase of one residential house so if you are a couple you receive only $10,000 and will not be allowed to claim again. This is a reason to maybe consider putting the house in one person’s name so later down the road you can use the others name to claim again. The grant can not be used to buy an established home however you may qualify if purchasing a substantially renovated new home. If you are purchasing an established home and are eligible except that fact the home is not new, you may be able to claim the first home owner rate of duty payment. This will be at the concessional rate and is limited to a value of 200K. Sadly it seems the government is trying to stimulate building new homes and not buying investments or established homes.
To be qualify with the application you must be living in the home for a continuous period of 6 months within 12 months of completion. The home can not exceed a cap of $750K below the 26th parallel of Australia (somewhere near Shark Bay). For more information visit:
https://www.wa.gov.au/sites/default/files/2020-07/First-Home-Owner-Grant-Fact-Sheet.pdf
https://www.wa.gov.au/organisation/department-of-finance/fhog
Australian Home Builder Grant:
The Australian Government has put in stimulus that will be paid by the WA government in the value of a one-off payment of $25,000. This is available between 4th June 2020 and the 31st of December 2020 for a new home, substantially renovated existing home or a purchase of a new home off-the-plan.
Some got ya’s with the grant is there must be construction within 3 months of contract date, you must be the registered owner of the vacant land on which the home is to be built (so no building on your parents block). For the purpose of subdivision of your own land, you must provide evidence you will be on the new land survey certificates once the foundation has been laid. The Grant is similar to the WA Bonus Construction grant in the fact the build must be your principal place of residence and the land and build value do not exceed $750,000. Renovation contract must be from $150,000 to $750,000 dollars with the existing home not exceeding $750,000 dollars. The personal eligibility requirements exclude those who have an income of over $125,000 pa for an individual or $200,000 for a couple.
The information and application form for the Home builder and the Bonus building grant can be submitted together and found on this website link:
https://www.wa.gov.au/sites/default/files/2020-07/Building-grants-application-form_5.pdf
Stamp Duty:
Stamp duty or what is called transfer duty is a payment to the state government in the form of a tax that is paid to the government for the privilege to hold and purchase an asset/home. Stamp duty is calculated differently based on the state and home value that your purchase. In WA you are exempt from paying stamp if you are first time home buyer and are purchasing a home as a principle place of residence, the same eligibility is required for the First Home Owner Grant. The threshold for a house must have a total dutiable value of less then $530,000 for a house and land or $400,000 for vacant land to be eligible to not pay stamp duty as a first home owner. To learn more and calculate your stamp duty that must be payable you can use this website:
https://stampduty.calculatorsaustralia.com.au/stamp-duty-wa
Summary:
Looking at the facts and considering where you stand now towardsinvesting or hoping on the property ladder,you are potentially gaining around $65,000 dollars worth of incentives from the government to sign the dotted line and build a new home to reside in. Never before have these incentives been so good but how good are the assets you can buy? If I were to use these incentives and look at the majority of new home and land packages around WA a lot would be in areas that I would not classify as an investment grade property. It is important to factor in all the data and area research before going ahead and signing to these incentives. I will be posting a WA new land and home package article soon on the areas being invested in with regards to the incentives. For now, here is a summary of the incentives and hopefully they can help you to enter and achieve your goals towards owning a property.
