First Home Grant gets cancelled
In another budget measure, the Government has cancelled the First Home Grant, with the savings redirected to support the expansion of social housing. However, a temporary exemption from the discontinuation was provided for first home buyers who may have faced unfair situations as a result.
“The First Home Grant scheme was closed with immediate effect on 22 May 2024, with savings being reprioritised into 1,500 new social houses. Since then I’ve been contacted by a number of individuals placed in a tricky situation because of the sudden closure of the grant,” Housing Minister Chris Bishop said in early June.
“For example, some people have valid sale and purchase agreements for first homes but have had settlement on those properties pushed out for a variety of reasons. The Government agrees those people should not be worse off as a result of the closure of the scheme.”
The temporary exemption, which has now expired, was valid for people who had an existing pre-approval that had expired before the announcement of the First Home Grant closure, and who had signed a sale and purchase agreement on or before 22 May 2024.
Why first home buyers might be largely unaffected
Meanwhile, CoreLogic Chief Property Economist Kelvin Davidson told Trade Me that the elimination of the First Home Grant would have a minimal impact on the first home buyer [FHB] market.
“For a start, although it’s estimated that as many as two in every five purchases by FHBs lately have benefitted from a first home grant, there’s always been a sense that the assistance was ‘nice to have’, rather than the primary source of funding for most buyers. Indeed, given that a typical deposit at the moment is probably in the vicinity of $140,000 to $150,000, it’s clear that first home grants were only ever going to be a final top-up for many people,” he said.
“In addition, it’s also worth remembering that the grants were essentially a subsidy, and if property sellers are aware of the system, economic theory will tell you that this kind of policy just tends to push house prices up. In other words, yes, you might get $10,000 as help with the deposit, but you might need to pay $10,000 more to actually secure the property.”
Please get in touch if you, or your children, are thinking about entering the market. Buying your first home is exciting, but it can also be a bit tricky when you’ve never done it before. I’ll explain the process to you, so you know what to expect, and will also help you get a home loan pre-approval, so you have your finance in place before you start searching for your property.