In theory, the switch in eligibility of first home buyer grants from existing properties to new homes made sense. The idea was to encourage building of new properties. In practice, it hasn’t worked – at least not yet. First home buyers have shown a lack of interest in building their first home, preferring to rent or buy an established property.
• In part it is a timing effect – the new homes (houses or apartments) must be planned and built. And if first home buyers don’t elect to build new homes themselves, they must rely on investors or developers to do so. The question is whether investors or developers are sufficiently interested in building new houses or apartments to market to the first home buyer segment.
• You would expect low interest rates, government grants and improved confidence to eventually lead to more homes being built. But the timing is uncertain, and that makes it difficult for builders and material suppliers.
What are the implications?
• NSW and Queensland will need to re-visit decisions to change first home owner grant schemes.
• Gen Y aren’t as keen as their parents were on buying or building homes with many preferring to travel and change jobs rather than being stuck paying a mortgage for 30 years. It is up to builders, material suppliers, governments and policymakers to better understand the changes occurring in the housing market.

• If developers or investors build homes for the first home buyer segment they will need to do their homework very well to ensure the right type of homes are built where buyers actually want to live.
Source: Craig James, Chief Economist, CommSec