Title :First home buyers drop out of the market Created : 2010-03-22 14:46:14.0 Author Name :Communications 16 March 2010 The First Home Owner Grant data released by the Office of State Revenue today indicates a dramatic fall in first home buyer activity since December last year. At the end of last year the Federal cash boost for first home buyers was removed, which saw supplements of $14,000 and $21,000 no longer available to this section of the market. The system has since reverted to a single payment of $7,000 to first time buyers. According to the OSR, grant application numbers for established dwellings in January (695) and February (692) are now equivalent to those of the historic low points of June 2004 (679) and February 2007 (691). These earlier low points preceded the introduction and increase, respectively, in first home buyer stamp duty relief in July 2004 and May 2007. The June 2004 figure was artificially low as the State Government announced in May of that year that stamp duty relief for first home buyers was to be included in the pending June budget. This alert curtailed activity for several weeks as first home buyers held back for the concessions which came in on 1 July 2004. Real Estate Institute of Western Australia President, Alan Bourke, said the results were concerning and probably pointed to two key themes: "These data suggest that the Federal boost pulled forward many first home buyers who might otherwise have waited which means current would-be buyers are fewer in number and will be for a while. "But it also suggests that the recent climb in interest rates has seen some potential first home buyers reconsider and withdraw from the market," Mr Bourke said. Mr Bourke said it was unclear how long the lull in first home buyer activity would last, but if it was sustained it may adversely impact on the established housing market. "A lack of first home buyers makes it harder for investors and trade-up buyers to sell their existing stock and move on. "This situation can create a domino effect and we may see some slow-down in the regular market later in the year if first home buyers are still thin on the ground," Mr Bourke said.