The Ripple Effect of New Homes

The First Home Owners Grant (FHOG), which provides a $10,000 grant for owners of brand new homes in Perth, seems to embody Australia’s housing policy as a whole. Given that the first-time homeowner of an existing property only gets $3,000 with the FHOG, it seems like the government is encouraging new builds over existing ones.

If you look closely at the underlying analogy, though, it’s not entirely surprising why. Granted, home sales of any kind trigger purchases of appliances, furnishings, and insurance. On the other hand, a new home construction project also fuels demand for building materials and builders’ services, thereby further contributing to the economy. You mostly can’t say the same when you purchase an established home.

Demand for new homes is also a tell-tale sign of increased consumer confidence and the will to invest in an invigorated market. Experts liken this trend to the “ripple effect.” Like a pebble dropped into a pool of water, a new home being built influences multiple economic indicators.

New home subsidies like the FHOG exist to curb the hefty expenses associated with new properties and promote new home construction. With such a subsidy available, investing in home and land packages in Perth is often the best option for prospective first-time home buyers.


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