Because of the scaling back of the stimulus packages introduced by the Rudd Government in the global financial crisis, there was a sharp increase in the amount of conveyancing work being done in the time leading up to Christmas of last year. There were a large number of transactions being done. However, on January 1, the First Home Buyers grant got reduced by $7,000.00 and it was originally the intention to have this reduced to zero by 1 July 2010. This has a serious impact for anyone involved in property market transactions in which the first home buyer grant operates, under $750,000.00 Although there were a lot of arguments about how the first home buyers grant was simply inflationary, which is partially supported by empirical evidence, now that the grant is being reduced, it is having an impact on sellers.

If you are a selling a property you may need to adjust your expectations about what you can get for your property as a result of the reduction of the first home buyers grant because there will be less demand for your property on the basis that the first home buyers will no longer have the same level of buying support under the market which was there beforehand. For this reason, you may need to look at offering something extra for the same money to place your property more squarely in the correct place in the market to attract a reasonable spread of buyers. This may involve making adjustments to the contract which you will need to discuss with your solicitor.

If you are buying, you would probably expect that the price of properties under $750,000.00 would come down by at least the amount which the first home buyers grant has been reduced by. So you need to be careful to avoid overpaying for a property which is still based on a price from when the grant was supporting the prices of these types of properties.

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