Grants lead to increased interest in northern suburbs land

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Government grants have kick started interest in northern suburbs land and housing packages but there are concerns about a potential increase in negative equity and mortgage stress. File picture

INQUIRIES about land for sale in the northern suburbs is going gangbusters, which is great news for developers but others are urging caution.

Capricorn Beach estate manager Richard Cull said the response to land or house-and-land packages since the federal and state government grants were announced had been 10 times more than normal.

Mr Cull said the response had been similar for the Yanchep and Two Rocks estates with 15 lots for sale in Yanchep and about 18 in Two Rocks.

He said the inquiries had come from both first homebuyers and downsizers and that builders could not keep up.

But Strategic Property Group managing director Trent Fleskens said there was a systemic oversupply in the suburbs of Yanchep, Alkimos and Eglinton and buying into those suburbs was fraught with danger regardless of the grants.

“With the grants now making it possible for people with no savings to now sign up a house-and-land package, it risks proliferating the already high levels of mortgage stress and over-supply we are seeing,’’ he said.

“If it is possible, I would suggest people looking to build to look at under-supplied suburbs like Heathridge, Craigie and Padbury for a similar price.

“If you are set on buying in Alkimos, consider purchasing an existing two-year-old house that is already for sale way under the price it would cost you to buy land and build next door.

“People fell into the same trap 10 years ago out on the fringes and they are still paying for it, trapped today.’’

On June 8 after the McGowan Government had announced its Building Bonus package to support WA’s residential building sector Real Estate Institute WA (REIWA) president Damian Collins said the institute understood the scheme was aimed at providing short-term jobs at a crucial time.

But Mr Collins said both the state and federal governments had missed an opportunity to undertake critical tax reform and remove stamp duty.

He said outer suburbs had suffered the most during the downturn with many people who purchased house-and-land packages in those areas now in negative equity and suffering mortgage stress.

“Just when things were picking back up, home sellers in the outer suburban areas will find themselves potentially at another $45,000 disadvantage compared to a new build,’’ he said.

“This could have serious ramifications for their financial position and at the very least, the state government should consider providing stamp duty relief in the short-term for buyers in these suburbs, so that the financial impact is minimised.”

Housing Industry Association WA (HIA) WA executive director Cath Hart said the McGowan Government’s $440 million investment to support jobs and businesses in the state’s residential building supply chain could not come soon enough.

“This will position WA to recover faster than other states by attracting more people to our remarkable state and generating jobs and business activity,’’ she said.

“This package could generate about $2 billion in additional activity for Western Australia’s residential building sector which will help industry weather the challenging 12-18 months ahead.’’

The Building Bonus offers eligible participants $20,000 grants to enter into a contract to build a new home on vacant land or to enter into an off-the-plan contract to purchase a new home as part of a single-tier strata scheme until December 31.

Homebuilder provides eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home.