Personal finance editor Neale Prior explains how the first home buyer cuts will affect the WA economy.

 

WA’s first home buyers grant will be cut back to $10,000, after the State Government announced it would end a $5000 boost at the end of next month.

Treasurer Ben Wyatt said the $15,000 grant, announced by the former government late last year- and at the time supported by Labor – had not resulted in a boost in first home buyers.

The move, which is expected to save the State Government $20 million, will come into effect on July 1.

The previous government had intended for the $15,000 grant to be in place for all of 2017.

The change comes less than a fortnight after the Real Estate Industry of WA said housing affordability was an east coast issue and that first homebuyer were the most active in the Perth market.

Mr Wyatt said the previous government’s decision to boost the grant to $15,000 was just an “election cash splash”.

“The boost is not an effective mechanism for stimulating additional construction of homes and given the disastrous state of the finances which we have inherited, we need to remove any ineffective spending,” Mr Wyatt said.

“Ceasing the boost early will allow the State Government to fund higher priority areas while ensuring Western Australian first home buyers continue to be eligible for generous government assistance.

“This action represents another $20 million saved over the forward estimates. It’s another step towards budget repair.”

At the time off of the previous State Government’s announcement, Mr Wyatt had praised the initiative.

“I’m glad the government has recognised that they’ve had a negative impact on that particular industry, but also recognise that the construction industry is a big employer in Western Australia,” he said.

“We’ll support that (first homebuyers) announcement and don’t have any intention of removing that in the event that we win government in March.”

A Bankwest report from December revealed Perth was the most accessible mainland capital city for first homebuyers and the only one where the time it took for a couple to save for a deposit was not increasing.

(source; The West)

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