The Western Australian State Government has been accused of creating an imbalance within the state’s housing market after scrapping the First Home Owners Grant (FHOG) for established homes in last week’s state budget.

Under the FHOG scheme in WA, first home buyers purchasing an established property could apply for a one-off grant of $3000, while those buying or constructing a new home could apply for one-off payment of $10,000.

Real Estate Institute Western Australia (REIWA) President David Airey said the government’s decision to scrap the grant for established houses, while leaving the grant for new homes in place is unfair to buyers looking for affordable housing.

“Supply is not the issue in WA, affordability is the issue and making it harder for first home buyers attracted to existing stock makes no sense,” he said.

“By aiming the FHOG to new constructions only, first home buyers who want more affordable, established homes in older suburbs are being disadvantaged.

“This creates an imbalance in the housing market and leads to urban sprawl.”

While he was critical of changes to the FHOG scheme, Mr Airey said he was pleased the government had decided to keep stamp duty exemptions in place for homes under $430,000 for first time buyers.

“It’s a real cost saving and I’m pleased this threshold has not been lowered,” he said.