Rann Government Delivers Crippling Blow to First Home Buyers

Today the Rann Government delivered another blow to First Home Buyers with the halving of the First Home Bonus Grant from the current $8,000 to $4,000 from 1 July 2012 and abolishing the grant completely from 1 July 2013.

This will make South Australia the only state in the nation that doesn’t provide some level of assistance to first home buyers.

The Budget papers, released today, state that the abolition of the grant in 2013 will result in a measly saving of only $10 million per annum from 2013, however to the average first home buyer it will have a significant impact and will likely destroy the home ownership aspirations for many young South Australians.

First Home Buyers are the cornerstone for any property market. A lack of them will, over time, have flow on effects through the remainder of the market.

Home ownership is one of the foundations to wealth and prosperity. Once a person is in the property market it is reasonably easy to stay in the market and as equity builds in the property through active and passive appreciation, that equity can be used for other forms of investment and wealth accumulation. The hard part for most young South Australians is that initial leap into home ownership, given the difficulties most face with trying to save an initial deposit whilst also paying rent and other increased costs of living.

This myopic decision by the government will no doubt have far reaching consequences in future years, particularly for stamp duty revenue, all to save a few measly million dollars in the short term.