Sting in the tail from the HomeBuilder grant
This article first appeared on The Real Estate Conversation.
While Property Owners Association of NSW president, John Gilmovich congratulates both the Federal and State Governments for taking positive steps to kickstart the economy, he warns of a dark side to their actions.
“It’s great to see both Federal and State Governments taking positive steps to reawaken the economy, but there’s a dark side to the announcement of the Homebuilder grant,” said Mr Gilmovich.
“The property spruikers are back in action in a big way.
At a Glance:
- Any capital growth improvements for new builds could be further delayed with the knock on effect caused by introducing more properties into the market
- Vacancy rates have more than doubled in most Australian capital cities with the CBD areas particularly hard hit
- In Sydney 16 per cent vacancy rate in the CBD and the Homebuilder grants have the potential to take more tenants out of the market
"They’re hyping the prices of new properties and promoting schemes that will catch inexperienced buyers.
"This will mean buyers will pay an inflated price for their purchase and may be waiting a very long time for any upside."
Mr Gilmovich also said any capital growth improvements for new builds could be further delayed with the knock on effect caused by introducing more properties into the market at a time when rental vacancies are at unheard of levels.
"According to SQM Research, vacancy rates have more than doubled in most Australian capital cities with the CBD areas particularly hard hit," said Mr Gilmovich.
“In Sydney we’re looking at 16 per cent vacancy rate in the CBD and the Homebuilder grants have the potential to take more tenants out of the market.
“While it will be good to see an increase in home ownership, buyers shouldn’t be thinking they will experience much capital growth in the next few years.
"Buyers should be wary if they’re being told their new purchase will achieve high growth, and ensure they verify the experience of their builder."
Mr Gilmovich said first time buyers, in particular, have a great opportunity at the moment with interest rates at historically low levels.
"They should use the opportunity to ensure they negotiate a good deal and compare what they might be able to purchase in established areas without using the grant," said Mr Gilmovich.
"Property owners also have the opportunity to access the Homebuilder grant for renovation projects, although there is a similar warning for owners.
"Owners are warned to ensure they conduct due diligence prior to finalising decisions as the short timeframe for the grants has the potential to encourage owners to rush through their preparation.
“Anyone considering a renovation project needs to ensure they check the quality and experience of tradespeople.
"Licences should also be checked through the Office of Fair Trading."
Property Webinar details
Implications of the Federal and State grants will be just one of the topics covered at the POANSW market update webinar, scheduled for Wednesday 24 June 2020.
Tenancy management, market valuations, legislative changes, property investor business support, lease negotiations and insurance will also be covered by topic specialists.