Do you think it is getting harder to buy a house in Australia, especially for Gen Y? In 2010, a survey by Genworth revealed that the average age of first time house buyers had risen to 31 years from about 25 years in the seventies. In July 2015, ABS revealed that the first home buyers accounted for only 15.4% of the buyers in the market.
It is surprising that while interest rates remain at a record low, housing remains unaffordable for the new entrants into the market. The reasons are simple – increasing prices and the surge in investment loan activity. With the recent debate on whether to rent or buy, more and more banks requiring almost 20% deposit amount and property prices in suburbs getting hotter – there is no doubt that first time buyers cringe.
In order to fix this situation, the Government started the First Home Owner Grant (FHOG) of $7,000 in the year 2001. The amount was doubled up to $14,000 in the years 2008 and 2009 and currently different states are offering different amounts as grants (check state-wise lists below for more information).
How does first home owners grant (FHOG) work?
If you are planning to buy your first house, first home buyers grant may be a substantial boost to your finances. The grant can be used against the deposit amount and most lenders are authorized to receive the grant on your behalf.
- The first home owners grant is a national grant that is administered by each state.
- Apart from the basic grant amount, many states provide stamp duty concessions and extra benefits, especially for new constructions.
- The grant is not means tested against income, but there is a cap on the total value of the purchased property.
- The grant is tax free, and of course, you can receive it only once.
Are you eligible for first home owners grant (FHOG)?
Since the first home buyers grant is meant for purchasing a house, it is subject to certain qualifications –
- You must be a natural person (not a company or a trust) over 18 years of age and a citizen or permanent resident of Australia.
- Neither you nor your spouse should own or have owned a residential property either wholly or jointly.
- Neither you nor your spouse should have availed the grant before. Further, notwithstanding the number of applicants, the grant is only provided once per transaction.
- The property must be located in Australia. It must be an established house or a new construction that can be lawfully used as a place of residence.
- You must occupy the home being purchased or built for residence for a continuous period of at least six months, commencing within twelve months of completion of the purchase. This means that the buyer must stay for a period of six months continuously, starting anytime during the first twelve months of the purchase.
Once your application is approved, the time of payment of grant would vary according to the type of dwelling and also vary in different states. Generally, for a new or established home, payment would be on settlement.
Now that you know what is first home owners grant, click below to download the benefits sheet for each State.
- First home buyers grant NSW
- First home buyers grant QLD
- First home buyers grant NT
- First home buyers grant ACT
- First home buyers grant SA
- First home buyers grant TAS
- First home buyers grant VIC
- First home buyers grant WA
Housing in Australia still remains very expensive, making it harder for first home buyers to break into the market. However, with the right amount of planning and making use of the first home buyer grant, they can still access the housing market.