The government unveiled its HomeBuilder grant today. On the surface, it looks very enticing. A $25,000 grant from the state government when you enter into a building contract between June 4th and 31st December. On top of this, state government incentives also apply. This means in WA, a first home buyer will receive $35,000.
The basics of the fine print are as follows. There is a total house and land limit of $750,000 in value. There is also a combined income limit of $200,000 to qualify for the grant. For renovation projects, you must spend over $150,000 and the home must be valued at less than $1.5 million. There are also exclusions from the contracts for some items like pools, etc.
If you have a secure job right now, this could be a great incentive to build a new home. So what are the traps?
On the surface, first home buyers looking to build could be eligible for $35,000 incentives if they qualify for both incentives. However, they will need to watch out for two things.
Firstly, they will need to avoid building a new home in a location where you can purchase an existing home that is less than the cost of the building package. In WA, this is could be an issue in some locations. Even a $35,000 incentive is not going to entice smart buyers into a potential negative equity trap. The smart buyers will use the money to secure land in an established location.
Secondly, some building companies have been reducing staff over the past five years. They are going to be faced with the challenge of administering the increasing demand for building contracts.
Customers will need to:
A/ be careful to ensure that all designs are compliant before signing contracts to avoid any surprise costs at a later date.
B/ avoid those building companies that are understaffed and likely to struggle with the administration and processing.
In the traditional first home buyer segment, it will be business as usual. Lots of hype about not missing out on the grant and high fives in sales. Then the rush to get contracts ready before the deadline day in the office. The hope of securing finance approval lingering for months.
Opportunities
I think buyers in the $500-$750,000 price bracket will have the best opportunity from this grant. This market segment has been quiet in recent years in Perth. I hope many people may see this as just enough to upgrade or make a change. There are lots of opportunities right now to pick up subdivided land in suburbs like Hillarys, Padbury, and Warwick.
The real winners!!!
Those wanting to renovate, or buy and renovate. There are some absolute bargains in Perth right now. With $150,000 you can do a nice renovation and get $25,000 back so it costs you $125,000. I know of several older properties, if renovated, would increase their value to $1.4 million. Finding one of these or picking up an old home with views from the upper floor and adding a second floor could turn a $125,000 investment into a much larger value. You will need to move quickly, however, this is a great opportunity.
At Piran Property Group our process involves a very simple three-step process. This is designed to put you in control.
1/We help design your new home
2/We obtain approval and certifications
3/We make it easy for you to compare builders
At Piran Property Group our experience is your advantage. You don't commit to a builder until you feel comfortable.
By putting you in control we guarantee you save time and money on your new build.
Contact us for more information on how to secure land or build your new home.
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