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Committed And Confident
By way of comparison, the global financial downturn of 2008 initially had a more serious impact on buyer confidence, until the government stimulus packages and lower interest rates took effect.
The November 2008 grant was accompanied by a much smaller increase in commitments (6%) than in 2000. However, coinciding with falling interest rates that assisted borrowing capacity, the introduction of the FHOB grant was followed by an increase in average first home buyer loans of almost 6% to $281,700.
By March 2009, the average first home loan had increased by 25%, over the preceding 12 months, to $293,900 while, for non-first home buyers, it had increased by less than 14%, to $272,900.
Government initiatives during the previous decade led to a proportionate increase in the number of first home loan commitments. In the first six months after the introduction of the government grant in November 2008, the proportion of loans to first home buyers (excluding re-financing) in Western Australia grew from just over 30% to a record 43%.
Excluding the effects of re-financing by non-first home buyers, the average size of a first home buyer commitment has typically been smaller than that of a non-first home buyer. However, the implementation of the FHOB was reflected by an increasing of the average first home buyer commitment to a similar or higher level. In November 2008, the average size of a first home buyer commitment exceeded that of the non-first home buyer commitment for the first time since April 1992.
On 1 October 2009, the First Home Owner Grant was reduced to $14,000 for new homes and to $10,500 for established homes. Following this, first home buyer commitments in Western Australia fell by 10.8% (original terms) in November 2009. On 1 January 2010, the grant was further cut back to pre-2008 levels ($7,000).
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