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MOST of them gave up on a house long ago, but now first home buyers are struggling with the latest government-inspired revision of the great Australian dream.

Responding to the worst first home buyer loan figures in 20 years, the head of the main developer lobby group said getting first-timers to choose new property was ”a cultural shift that people are finding a bit difficult to grasp – they just want to buy an existing home”.

The O’Farrell government’s axing of the long-standing $7000 First Home Owner Grant came into effect on October 1. It was replaced with a $15,000 grant that applied only to new property, with the aim of boosting construction.

”We’re still in a transitional period,” the chief executive officer of the Urban Taskforce, Chris Johnson, said. It would ”take a while” for first home buyers to adjust to the new incentives.

However, he isn’t expecting a ”giant spike” in first home buyers choosing new property.

Housing finance figures for November showed that only 1383 home loans were taken out by first home buyers in NSW. That was 700 fewer loans than October. The opposition said the O’Farrell government had ”abandoned first home buyers”.

And figures later in the week from AFG, Australia’s largest mortgage broker, seemed to confirm that the loss of the $7000 incentive had made a difference, with the percentage of first home buyer loans dropping to 4.2 per cent of total loans in the final two months of the year. Usually it is 12 to 15 per cent.

The senior economist at Australian Property Monitors, Dr Andrew Wilson, agreed that most first home buyers wanted existing property.

”New houses that they can afford are too far away from the CBD. First home buyers are not prepared to go 50 or 60 kilometres out of the city,” he said.

”And there’s a lot of demand for apartments as we know, but if they’re purchasing off the plan there’s often a two-year wait.”

Yet Dr Wilson said more government handouts wasn’t the answer. ”We don’t need more incentives, we need more homes, more high rise, and we need it fast,” he said.

”Buyers will have more choice of properties, which will mean that prices and rents will moderate.”

There has already been a huge drift to apartment living and Mr Johnson said those first home buyers who hadn’t embraced new apartments may need to reconsider, because of affordability issues but also to avoid long-distance commuting.

Story by Stephen Nicholls Story Source:

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