The ongoing construction crisis in Perth, characterised by a significant shortage of tradespeople and builders, is severely limiting the effectiveness of the First Home Owner Grant (FHOG), leaving first-time buyers with dwindling options, according to a buyer’s agent.
“The construction industry in Perth is in a tight spot,” said Peter Gavalas (pictured above), of Resolve Property Solutions. “We're seeing extended delays and financial strain due to the backlog of projects. Unfortunately, this means first-home buyers have fewer new homes to choose from, limiting their options in an already competitive market."
The construction sector’s challenges are exacerbated by a backlog of projects from the pandemic era, now less profitable due to rising costs.
“Many builders are hemorrhaging financially as they try to complete outdated contracts, a situation reflected in the fact so many have gone broke,” Gavalas said.
According to an ASIC report, 132 construction firms in Western Australia faced administration in the 2022-23 financial year.
The construction crisis coincides with Perth’s acute rental shortage, further squeezing first-home buyers. With a vacancy rate of just 0.4% in February, the lowest nationwide, median rent values have surged 17.3% over the year.
Additionally, saving for a deposit has become more challenging, with timelines extending significantly due to rising property prices. According to Domain, saving for a deposit now takes nearly four years for a house and more than two years for a unit.
“It's clear that something needs to change to provide relief to these buyers," Gavalas said. “The state government needs to address the reality of today's market.”
Gavalas urged the state government to rethink the FHOG, suggesting it no longer meets the needs of first-time buyers or the construction industry’s realities.
“The existing FHOG framework is out of touch... Including established homes in the FHOG could be a game-changer for many,” he said, advocating for a policy shift to include established homes and thereby offer first-home buyers access to a broader property market and help ease the current housing strain.
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