$10,000 First Home Owners Grant has started

If you are looking to build a new house and you are a first homebuyer, your time has come. The state government's changes to the first home owner grants program started yesterday, allowing you to claim $10,000 cash. However, if you are buying an existing property, you will only receive $3,000, which was only a few day ago $7,000. 

Who's Eligible?

To be eligible for the FHOG, applications must satisfy the following eligibility criteria:

• Each applicant must be a natural person (i.e. not a company or trust)
• Each applicant must be 18 years of age or over at the commencement date of the eligible transaction
• At least one of the applicants must be an Australian citizen or permanent resident at the time of making an application.
• Each applicant and/or their spouse cannot have previously received a FHOG under this scheme
• Each applicant and/or their spouse cannot have owned residential property anywhere in Australia before 1 July 2000.
• Each applicant and/or their spouse cannot have previously owned residential property anywhere in Australia on or after 1 July 2000 and occupied that property as a place of residence before 1 July 2004.
• Each applicant and/or their spouse cannot have previously owned residential property anywhere in Australia on or after 1 July 2000 and occupied that property as a place of residence for a continuous period of at least six months that began on or after 1 July 2004.
• Each applicant must occupy the home being purchased or built as their principal place of residence for a continuous period of at least six months, commencing within twelve months of completion of the eligible transaction.
• Each applicant must have entered into an eligible transaction on or after 1 July 2000. An eligible transaction is defined under section 14 of the First Home Owner Grant Act 2000, but is generally a contract for the purchase or construction of a home, or commencement of construction of a home as an owner builder.
• For eligible transactions commencing on or after 1 January 2010, the total value of the home must not exceed the cap amount. The cap amount is:
• $750,000 if the property is located south of the 26th parallel of South Latitude, or 
• $1,000,000 if located north of the 26th parallel of South Latitude.

For more details, see the FHOG fact sheet here.

Save $400,000 by Going Next Door

As you look for a new home, it often pays to think a little different to the many other homebuyers. An excellent article highlighting this appeared in the Daily Telegraph. They showed that a homebuyer can save a significant amount of money by buying into a suburb next to a more popular one. For example, those who purchased a property in Thornlie could pay their mortgage off 17 years and four months sooner than those in neighbouring Canning Vale and save $194,853 in purchase price. They would also potentially save $190,721 in interest repayments over time!

A while ago, I received a newsletter from Seth Godin, which illustrates this idea. 

"Every morning, the line of cars waiting to get onto the Hutchinson River Parkway exceeds 40. Of course, you don't have to patiently wait, you can drive down the center lane, passing all the civilized suckers and then, at the last moment, cut over. Drivers hate this, and for good reason. The road is narrow, and your aggressive act didn't help anyone but you. You slowed down the cars in the lane behind you, and your selfish behavior merely made 40 other people wait. 

This is a different act than the contribution someone makes when she sees that everyone is patiently waiting to enter a building through a single door. She walks past everyone and opens a second door. Now, with two doors open, things start moving again and she's certainly earned her place at the front of that second entrance. 

Too often, we're persuaded that initiative and innovation and bypassing the status quo is some sort of line jumping, a selfish gaming of the zero sum game. Most of the time it's not. In fact, what you do when you solve an interesting problem is that you open a new door. Not only is that okay, I think it's actually a moral act. 

Don't wait your turn if waiting your turn is leaving doors unopened." 

Have a look at this table and see if this changes the way you think about buying a home in Perth.

HOUSES
RANK	POPULAR SUBURB	MEDIAN VALUE	HIDDEN GEM	MEDIAN VALUE	$ SAVING	% SAVING
1	Scarborough	$700,173	Innaloo	$618,891	$81,282	11.6%
2	Fremantle	$802,051	O'Connor	$572,144	$229,908	28.7%
3	Mt Lawley	$929,428	Highgate	$678,530	$250,899	27.0%
4	South Perth	$1,038,277	Victoria Park	$623,090	$415,187	40.0%
5	Canning Vale	$626,973	Thornlie	$432,120	$194,853	31.1%
6	Subiaco	$1,155,047	West Perth	$709,723	$445,324	38.6%
7	Como	$702,191	Bentley	$501,376	$200,815	28.6%
8	Maylands	$598,708	Ashfield	$496,997	$101,711	17.0%
9	Dianella	$635,811	Morley	$518,317	$117,424	18.5%
10	Bayswater	$617,172	Eden Hill	$439,378	$177,794	28.8%

UNITS
POP. RANK	POPULAR SUBURB	MEDIAN VALUE	HIDDEN GEM	MEDIAN VALUE	$ SAVING	% SAVING
1	Scarborough	$584,153	Churchlands	$433,238	$150,915	25.8%
2	Fremantle	$586,922	White Gum Valley	$361,959	$224,963	38.3%
3	Mt Lawley	$400,509	Glendalough	$324,219	$76,290	19.0%
4	South Perth	$601,106	Victoria Park	$480,272	$120,834	20.1%
5	Canning Vale	$411,932	Langford	$302,088	$109,844	26.7%
6	Subiaco	$660,165	Wembley	$351,859	$308,307	46.7%
7	Como	$502,607	Bentley	$430,867	$71,740	14.3%
8	Maylands	$380,194	Coolbinia	$357,032	$23,162	6.1%
9	Dianella	$419,550	Mirrabooka	$297,154	$122,396	29.2%
10	Bayswater	$409,077	Bassendean	$384,679	$24,398	6.0%

Source: realestate.com.au, Westpac and RP Data

Perth Rent... so it's down now?

The REIWA boss has announced that the number of home vacancies in Perth for the last six months has doubled from 2,000 to 4,000 as the real estate industry mourns the slow death of the mining boom. David Airey said the impact could be felt most in the premium rental property segment where "a $1,500 / week rental may have to fall to $1,100 or $1,000 to get a tenant".

In one example, a Bicton couple leasing out their property for the last two years at $1,300 per week had to drop the rent to $980 per week to get a new tenant back into their property. However, it seems that the mid-tier rental properties that usually go for $480/week are relatively safe. Perhaps some renters are also realizing that it is cheaper to buy than to rent.