Cancellation of Housing Grants Spurs Second-hand Home Sales

This year's cancellation of housing grants for potential homebuyers has significantly altered housing market patterns, a Dun and Bradstreet report revealed yesterday.

On the one hand, the cancellation hurt contractors' market share, but on the other hand, it spurred activity in the second-hand housing market.

The advantage contractors once held over first-time homebuyers who were eligible for the grants has been eliminated, according to the D&B analysts.

Second-hand homes accounted for over 78 percent of all home purchases in the first half of the year, more than four times the 19 percent share of contractors. In 2003, the market split was 66 percent for the second hand homes, while contractors held a 21 percent share.

A decade ago, the second-hand market accounted for only 52 percent of all sales compared to 30 percent for homes built by contractors.

Growth in second-hand market sales has led to an increase in realtors, although most new ones are not licensed. In fact, barely half of the country's 16,000 realtors are fully licensed.

The government's decision to cancel housing grants has cut the number of eligible buyers nearly in half compared to last year. In January-August 2004, 15,865 homebuyers, or a quarter of the overall market, were eligible for grants. In contrast, during the parallel, 30,123 eligible homebuyers accounted for nearly 39 percent of the market.

The D&B real estate division noted that the 2005 budget would cut additional grants by further restricting the point system used to determine eligibility. This step will further cut the number of eligible buyers, and reduce home buying rates accordingly.