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Housing incentives fail to fire

Tuesday, 12 February 2013
Author: Kevin Naughton, Indaily

STATE Government incentives for new home owners have failed to stimulate the market, with no signs of improvement in home finance commitments.

The latest figures, released yesterday by the Australian Bureau of Statistics, show November and December last year were both among the worst four single monthly figures recorded in 14 years.

The seasonally adjusted figures show just 2888 finance commitments in December 2012, slightly up on 2856 in November which was the lowest single month since March 2011 and the third lowest since November 1998.

To find a similar batch of months well below the 3000 mark, you have to go back to the second half of 1998 and before that, 1995.

It's not a good sign for the construction sector given the combined incentives of low interest rates, government grants and stamp duty concessions.

On October 15 last year Premier Jay Weatherill announced a new Housing Construction Grant for everyone building a new home, which took effect immediately.

Homebuyers were to receive $8500 for a new home and first home owners building or buying a brand new home were eligible for $23,500.

At the time the Premier said the grants would "provide an urgent boost to the state's housing construction industry and help stimulate the property sector".

The ABS figures are a blow to those hopes.

Weatherill told Indaily today it was too early to tell if the measures had worked.

"IT is too early to tell how successful the latest housing assistance grants have been," he said.

"The government will review the effectiveness of these measures as part of the Budget process.

"However, it is important to note that the majority of conveyance duty comes from sales of existing houses and not new construction."

While there was a slight uptick in the purchase of new dwellings (71 in December, up from 66 in November), overall activity in that sector is down around 50 per cent on the pre-Global Financial Crisis period.

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