The first month of Canberra’s new first-home buyer concession scheme saw a significant rise in the number of first-home buyer loans in the territory, according to figures released on Monday.
Australian Bureau of Statistics showed the number of first-home buyer loan commitments in July was 225 – an increase of 56 per cent on June.
First-home buyers represented 27.4 per cent of all loans in the territory, an increase of almost 5 per cent. Master Builder’s ACT chief executive Michael Hopkins said the figures indicated the concession scheme had had an immediate impact.
“[The] figures illustrate that the ACT government’s decision to remove stamp duty has had a positive immediate impact on the number of first-home buyers,” he said.
“First-home buyers remain a vital driver within the Australian housing market and [the] figures show that lowering taxes in a targeted way can have positive social and economic impacts.”
The first-home buyer lift could also be contributed to prices coming off their December-2018 peak, according to Domain research analyst Eliza Owen.
“There was a period where we saw prices had risen fairly consistently, so that may have discouraged first-home buyers [but] prices have come off their peak and that encourages more first-home buyers.”
Canberra’s new first-home buyer concession scheme came into effect on July 1. The new scheme saw stamp duty abolished on all properties for first-home buyers under an annual household income threshold of $160,000.
Previously, concessions for first-home buyers in the nation’s capital applied to new builds only.
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During the initial days of the scheme, it was reported that first-home buyers had already taken advantage of the changes.
The scheme was first announced in the 2018-19 ACT budget and after the announcement, first-home buyer loan commitments in the territory trended lower than the national average.
In the first six months of 2019, first-home buyer loans in the ACT were down 35 per cent on the same period last year. But, in that time, first-home buyers were also contending with tighter lending criteria due to the Financial Services Royal Commission.
When similar schemes came into play in NSW and Victoria, both states recorded a spike in first-home buyer loans, up 50 per cent and 30 per cent, respectively, during the first six months of their schemes.
Ms Owen said the changes could cause prices to rise at the entry level.
“There is the risk that because these concessions are directed strictly towards house purchases, any concessions could be added to the price of the property,” she said.
“First-home initiatives can have an inflationary impact on the lower end of the market where first-home buyers are buying.”