Victoria's housing market is experiencing a boost from the $10,000 First Home Owner Grant (FHOG), contributing to the construction of over 12,000 new homes annually. This grant has played a crucial role in addressing the state's housing undersupply. However, as the government explores solutions to the housing and rental crisis, concerns have arisen about redirecting the $122 million yearly funding from the FHOG.

While a similar grant for regional first-home buyers building new homes was quietly discontinued in 2021, industry experts caution against making changes to the FHOG, as it could worsen Victoria's housing and rental challenges. The 2021-2022 financial year saw 12,200 Victorians access the FHOG, indicating its significance in supporting new home construction.

Industry figures highlight the critical role of incentives like the FHOG in encouraging first-home buyers to contribute to new housing supply. In some areas, first-home buyers constitute up to half of the new homes market. Given the escalating costs of new homes, rising interest rates, increased rental costs, and low vacancy rates, experts argue that now is not the time to remove incentives that promote home ownership.

Figures released by CBRE reveal that Victoria needs to build 108,000 new apartments within the next three years, while only having plans for 38,000. The Urban Development Institute of Australia Victoria emphasizes that incentives for new buyers, including the FHOG, are crucial to alleviate the housing crisis. Removing such incentives without introducing new ones could result in a significant loss of new home construction, worsening the rental and housing market conditions.

Experts underscore the importance of maintaining policies that enhance housing supply, given the critical shortage of homes to meet market demand. The state government is considering various measures to address the housing crisis and is working on a housing package. However, stakeholders stress that any changes must not negatively impact new housing supply, especially with the ongoing influx of migrants and historically low vacancy rates.

As the debate continues, industry leaders call for careful consideration and effective solutions to ensure the stability of Victoria's housing market and the continued support for those striving to enter the property market.