2007 could well prove to be a good year for homebuyers especially for first homebuyers. The year has started off well for First Homebuyers in Queensland with the increase in the transfer stamp duty concession from 1 January 2007. Under those changes first home buyers will not be required to pay stamp duty on vacant land up to $150,000 or on an established home up to $320,000.

A Federal Election is due in 2007 with the last election held on 9 October 2004, so we can expect the Federal Government will make every effort to keep voters on side in the lead up to the election. The monthly meeting of the Reserve Bank in relation to interest rates and the May budget will therefore be of particular interest to homebuyers. Commentators on interest rates have mixed views with some expecting a further rate rise in February and others suggesting no futher upward movement but a reduction later in the year. A reduction in interest rates would be very welcome for the government after five years of continuous interest rate rises.

In an election year a wise government will be very careful not to make any decisions that could cause an interest rate rise but rather implement policies that will maintain stable interest rates.

However in the May budget the government could still implement changes to assist families to offset rises in living expenses they are already bearing. One area which affects homebuyers that is long overdue for review is the First Home Owners Grant. The First Home Owners Grant of $7,000 was established on 1 July 2000 to offset the impact of the GST on first home buyers. The grant remains at $7,000 while the cost of housing and associated costs has certainly risen since 1 July 2000. An increase in the First Home Owners Grant would be a welcome move. However given the Government’s record to date on this grant a first homebuyer should not wait to buy in the hope the government may increase the grant as they could well miss out on a good home purchase opportunity.

Lenders are offering new and innovative loan products that assist homebuyers in getting into their own home. During 2006 we were able to assist a number of first home buyers with good employment and credit history records but limited savings. In these cases the first homebuyers were able to borrow up to 100% of the value of the property using the First Home Owners Grant to assist with costs. The increase in the transfer stamp duty concession will further assist first homebuyers as this will reduce the costs. Family assistance by way of a gift, inheritance or by a family member guaranteeing the loan are also options available to homebuyers to consider in purchasing their own home.