Treasury data douses fears state grant will push house prices out of reach

Claims the state government’s doubling of grants for first home buyers would push prices out of reach have been rejected, with data revealing prices in Brisbane could rise by just $1500.

Queensland Treasury data exclusively obtained by The Courier-Mail claims the state government’s doubling of the first-homebuyers grant could increase Brisbane property prices by just $1500.

Leading economists have voiced fears that boosting the grant to $30,000 will inevitably push house prices higher and further out of reach of average Queenslanders.

But Treasury insists the narrow scope of the offer – for new builds until mid-2025, will have a minor impact on the market.

Premier Annastacia Palaszczuk announced the increased measure last week.

Treasury modelling shows the $210m estimated cost of the boost is a fraction of the value of the total property transactions over the past 19-month period. Analysis of the total sale trends combined with estimated median price growth states total transactions during the boost will equate to $124bn, the data shows.

This means house prices could increase but the lift could be just 0.2 per cent, which would equate to the current median dwelling price for Brisbane of $773,000 increasing by about $1500.

Treasury said the boost to the grant was estimated to benefit about 3800 transactions.

“This highlights that, in the context of the overall Queensland residential property market, the boost to the first-homeowner grant is not expected to have any material impact on overall prices in the market, while providing significant benefits to individual first-home buyers who are eligible for the increased grants,” Treasury analysis contests.

Economists fear it could increase the price of homes.

AMP chief economist Shane Oliver said it was reasonable to assume the impact would be minimal given the scale of the incentive compared to the overall sector.

But he said specific corners of the market could be inflated further, given some buyers would be armed with $30,000 more than their competitors.

“And that will mean more competition for homes and upwards pressure on prices,” he said.

“Of course they’re ultimately building more homes as well (to increase supply in the market) so it’s better that it’s done this way than just giving it to people to buy any home.

“I agree that it’s a better way to go but it still results in more pressure on prices than would otherwise have been the case because you’re giving people extra money and that enables them to bid up prices.”

Economist Cameron Murray, a research fellow in the Henry Halloran Trust at the University of Sydney, said the impact could be limited given there are fewer potential buyers in the market due to cost-of-living pressures. “The modelling has various assumptions in it but … it’s worth remembering that the price effects will be temporary,” he said.

“How large they are and how temporary they are depends on how many first-home buyers there are today waiting who will change their decision based on this grant. And my argument is that there’s fewer (potential first-home buyers) today than there were 18 months ago, so the price effect will be moderate and won’t persist for very long.”