Australian Property News

Victoria scraps first homebuyer bonuses

Posted on Thursday, May 03 2012 at 11:31 AM

Victoria’s residential property market faces a fresh blow after the government announced it would wind up first homebuyer bonuses from July 1, to help reduce the state’s budget deficit.

In handing down the 2012-13 State Budget on Tuesday, the government blamed a significantly trimmed down stamp duty revenue as a result of dwindling property transactions – down $366 million for 2011-12 and estimated to be $1.13 billion lower between 2012-13 and 2013-14.

First homebuyers were eligible for bonuses of $13,000 for new properties priced up to $600,000, with an additional $19,500 on offer for new homes in regional areas.

Critics say scrapping the incentives will only further dampen the confidence of new homebuyers at a time when Victoria’s unemployment rate sits at 5.8 per cent – the highest of any mainland state or territory – and new housing is in a position of oversupply.

Melbourne-based small developer Troy Harris of Rookie Developer says the move will cost construction jobs and hurt the greater economy.

Harris also believes it will create a “mini rush” over the next several weeks, “to buy before the bonus evaporates”.

“I think there will be a little run of first homebuyers of new homes bringing forward their purchases from later this year – that’s if they can move in time given the short notice period which I think is very poor form,” Harris says.

“I doubt (this) will affect small developers as much as it will your Metricons and the like, as they have a higher percentage of first homebuyers and they also engage full-time employees who can be laid off, whereas small developers like myself just engage a builder per project.”

The first homebuyer bonus was initially launched off during the global financial crisis to prop up jobs. “Now at a time when construction jobs genuinely are under pressure they remove it. My gut feeling is they are going to regret it.”

Other austerity cuts include more public service job bloodshed and the likely canning of a new children’s hospital in Melbourne’s southeast, ninemsn reports.

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