WA - total 45k grant for new builds - market impact

Discussion in 'Property Market Economics' started by Rooky, 7th Jun, 2020.

Join Australia's most dynamic and respected property investment community
  1. Martinez22

    Martinez22 Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    374
    Location:
    Perth
    I wonder if there is any point given the short time period, by the looks of it you'd need the titles issued before the end of the year?
     
  2. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    Quite possibly but that doesn't stop people not reading/investigating/due diligence on buying sites. There is a current demand of people that want that "free" money from the government and unfortunately they may "spend" it all before they even begin by making a poor decision.
     
    Archaon, charttv and Propin like this.
  3. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World
    Its a double edged sword if build prices goes up we may gain nothing

    most important thing is numbers stack up with or with out grant
     
    Westminster and Propin like this.
  4. Gingerbeer

    Gingerbeer Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    45
    Location:
    Perth
    How true this is. By all accounts much of the grant money will be lost paying premiums on land and build cost
     
    charttv and Westminster like this.
  5. Rooky

    Rooky Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    575
    Location:
    Perth
    Very true. Many investors do not realise this.
     
    MTR likes this.
  6. Rooky

    Rooky Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    575
    Location:
    Perth
    Thats exactly what government wants to happen and will happen. Government does not care if builders get rich in the process.
     
    charttv and Westminster like this.
  7. Martinez22

    Martinez22 Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    374
    Location:
    Perth
    We sub-divided our PPOR a couple of years ago, originally we wanted to build at back to make it our new PPOR but servicing got tight. So have been trying to sell the vacant land for over a year to try break even. Magically, the rear block has got a lot of interest and now I am hesitant to sell it off and perhaps build myself to make the most of the grants. What would you guys do? I don't see myself making much profit from the vacant land but it would be such a good time to offload it, on the other hand, it's the perfect time to build and capitalise on the grants. Don't want to make the wrong decision, what would you guys suggest? :S @MTR @Westminster
     
  8. Damo93

    Damo93 Well-Known Member

    Joined:
    26th Dec, 2017
    Posts:
    619
    Location:
    Perth
    Difficult for anyone to answer as it’s more a personal choice when it comes to a PPOR but I always put myself in OP’s situation and think what would I be asking myself..

    I guess the questions I would ask myself are:
    1) Do you still want to build PPOR on the rear block?
    2) What will you do with the current house on the front block (assuming retain and build).
    3) Is servicing tight still?

    If it’s not making money it’s costing money so if the answer to 1) is no then offloading the rear lot would probably be a good choice..
     
    Martinez22 likes this.
  9. Martinez22

    Martinez22 Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    374
    Location:
    Perth
    Thanks for that, any feedback helps. I would love to build the PPOR at the back but servicing is stiil tight, trying to offload another investment in the meantime. If that doesn't happen in time, think I'll just have to get rid of the vacant lot while we get chance this year
     
  10. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World

    I need the numbers and what you are trying to achieve
    Will you make a profit if you build?
    Will you increase cash flow if you build?
    Would you consider living in the new build and sell the front?? Do the numbers work this way? Is it even an option?

    so many variables its hard to answer your question unless we know more
     
    Damo93 likes this.
  11. Always Learning

    Always Learning Member

    Joined:
    23rd Feb, 2020
    Posts:
    16
    Location:
    Perth
    Does anyone know when the home builder payment will be paid by the WA gov? is it something first home buyers can use as their deposit before construction begins or will it be paid as a lump sum on completion of construction?
     
  12. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    no I believe neither can be used as deposit. The state grant is paid at slab down.
     
    Archaon likes this.
  13. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    More examples are up on the WA grant website now which give some extra information/guidance/info

    some are developer scenarios
     
    MTR likes this.
  14. gach2

    gach2 Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    1,895
    Location:
    sydney
    So im guessing unsecured/non listed loan sharks (type that charge extremely high interest and break knees with baseball bat type) would be having a booming business haha
     
  15. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    Maybe. The grants don't change how the banks want deposits to be - which is fair enough - they should be evidence of savings which shows the bank that you are a low enough risk to lend upon. The grants are not related to lending and if the home owner wants to blow the grant on a massive full body tattoo done in Hong Kong flying first class then as foolish as that is, they can do it. Sensible people will put the money on the mortgage but some won't :p
     
  16. Always Learning

    Always Learning Member

    Joined:
    23rd Feb, 2020
    Posts:
    16
    Location:
    Perth
    Thanks for the info
    So I’m assuming once slab goes down and Grant is paid then the homeowner is free to spend the $45000 on whatever they want? The smart ones will pay it off the mortgage but I bet Harvey Norman will be busy - delivery of a whole house of brand new furniture on handover day??
     
  17. Rooky

    Rooky Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    575
    Location:
    Perth
    No, thats not the case. You get total 3 grants based on what you are eligible and apply for.

    1. Original FHB grant of 10k from state government - can be used as part of deposit and government will pay to whoever you direct them to. Generally it goes as deposit.
    2. Federal grant of 25k. Details are sketchy but federal government FAQ on scheme said that it will be disbursed by state and territory government along lines of their existing FHB grant. So its higly likely that it can be used as deposit.
    3. State grant of 20k. This is very clear - will be paid when foundation is laid if you own the land. If you have got OTP contract, it will be paid when construnction is complete and land is registered in your name. This grant cant be used as deposit as its paid to person who is title holder of the land.
     
    charttv likes this.
  18. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World
    I am starting to wonder whether these grants are good or bad.

    Builders are putting up prices as trades are all raising prices, ripple effect

    Apparently Dale Alcock has 12 months backlog

    There are now builders also not taking on clients due to not being able to meet demand.I guess this will mean property prices will rise? But will it be a short time frame, a bit of a bubble

    So who will be the real winners here???
     
  19. Pigey

    Pigey Well-Known Member

    Joined:
    31st Oct, 2018
    Posts:
    64
    Location:
    Perth
    What does a 12-month backlog mean? Would that affect other brands in the ABN Group?

    I have a friend who is about to get a cost estimate from WB.

    They've been dealing with the sales rep for a few months now so he's assured them they won't pass on any cost increases. Will get a building quote on a custom design this week. They never got a firm number before, so it will be hard to know whether they're pricing on pre-grant or post-grant costs.
     
  20. Martinez22

    Martinez22 Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    374
    Location:
    Perth
    Does anyone know what is happening with legislation? Has it passed yet? Any news on what stage you'd be able to access the funds?