❓ Mr. Nalder questions the lack of increase in First Home Owner Grants despite a forecast rebound in dwelling investments. The Treasurer explains the disconnect and outlines Treasury's forecasting methodology based on the 25-34 age cohort.
AnsweredQoN 2147Legislative Assembly
QuestionView source ↗
In relation to page 527 of
Budget Paper 2 and the ‘Amount Authorised by Other
Statutes – First Home Owner Grant Act 2000’, and ask: (a) given there is a rebound of 5 per cent in
dwelling investments forecast, why is there no corresponding increase in first
home owner grants; and (b) what is the modelling undertaken by Treasury in
relation to first home owner grant calculations across the forward estimates?
Budget Paper 2 and the ‘Amount Authorised by Other
Statutes – First Home Owner Grant Act 2000’, and ask: (a) given there is a rebound of 5 per cent in
dwelling investments forecast, why is there no corresponding increase in first
home owner grants; and (b) what is the modelling undertaken by Treasury in
relation to first home owner grant calculations across the forward estimates?
AnswerView source ↗
Answered
21 November 2017
Response time
12 days
(a) Forecasts of the first home owner grant expense and dwelling investment are not directly comparable: (i) Dwelling investment in a particular financial year comprises the construction of new dwellings as well as the expenditure associated with altering or adding-to existing dwellings. For instance, alterations and additions have accounted for around 35% of total dwelling investment expenditure in the last three years. The State’s dwelling investment activity is determined by demand factors, such as total population growth which is forecast to lift in each year of the forward estimates.
(ii) The first home buyer market relates only to a subset of new dwelling construction. First home buyer applications in 2016-17 equated to 38.5% of all dwellings commenced in Western Australia.
(iii) The first home owners grant is applicable to buyers (primarily within the 25-34 year old age cohort) of homes that have yet to be constructed (for example, owner builds and off-the plan builds) and of homes that have recently been constructed (for example, existing dwellings in a new housing development). On this basis, the payment of a grant in a particular financial year could relate to a dwelling built in the previous financial year, the current financial year or in a future financial year.
(b) Treasury forecasts first home owners grant payments by escalating the total number of grants paid in the latest financial year by the change (growth or decline) in the annual projections for the 25-34 year old age cohort (the prime demographic of first home buyers). These projected annual grant numbers are then multiplied by $10,000 to estimate the expense in each year. In the 2017-18 Budget, the 25-34 year old age cohort is forecast to decline by 1.3% in 2018-19 with further declines expected in 2019-20 and 2020-21.
(ii) The first home buyer market relates only to a subset of new dwelling construction. First home buyer applications in 2016-17 equated to 38.5% of all dwellings commenced in Western Australia.
(iii) The first home owners grant is applicable to buyers (primarily within the 25-34 year old age cohort) of homes that have yet to be constructed (for example, owner builds and off-the plan builds) and of homes that have recently been constructed (for example, existing dwellings in a new housing development). On this basis, the payment of a grant in a particular financial year could relate to a dwelling built in the previous financial year, the current financial year or in a future financial year.
(b) Treasury forecasts first home owners grant payments by escalating the total number of grants paid in the latest financial year by the change (growth or decline) in the annual projections for the 25-34 year old age cohort (the prime demographic of first home buyers). These projected annual grant numbers are then multiplied by $10,000 to estimate the expense in each year. In the 2017-18 Budget, the 25-34 year old age cohort is forecast to decline by 1.3% in 2018-19 with further declines expected in 2019-20 and 2020-21.
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