Moves to stimulate residential construction in Western Australia by beefing up incentives for first home owners to purchase new or newly constructed homes have passed the first hurdle in the state’s parliament but have been delayed and are now not likely to take effect until next month.

Changes to the state’s First Home Owner Grant passed through the legislative assembly last week.

Under the changes, first-home purchasers of existing homes will see their First Home Owners Grant slashed from $7,000 to $3,000 but those purchasing a new or newly constructed home will see their grants rise by $3,000 to $10,000.

While primarily a budget-saving measure, the move is also designed to stimulate housing supply and construction by providing an incentive for first-home buyers to purchase new homes as opposed to existing homes. It follows a similar but more aggressive move in Queensland, where the government abolished the grant completely for purchasers of existing homes but more than doubled that available for first-home buyers of new homes from $7,000 to $15,000.

Though disliked by real estate groups, such moves are generally popular with building industry groups, who say they provide greater stimulus for housing construction at a lesser cost to taxpayers.

“This key initiative will continue to support first home buyers, help to increase housing supply and, very importantly, help create jobs in the housing sector in WA,” Western Australian Treasurer Troy Buswell says.

The changes had been expected to be in place by September 15 but are now set to be considered by the Legislative Council this week and will not come into effect until Royal Ascent has been granted, which the government says should happen by the end of October at the latest. The changes which will not affect the current transfer duty exemptions available to first home buyers for purchasers of less than $500,000.

The latest moves come as the state government is trying to unlock housing supply in Perth and elsewhere in order to ease a growing shortage brought about by high levels of population growth and recent low levels of residential building.

The moves come on top of a recent overhaul of planning laws, which removed requirements for occupants of ‘granny flats’ built above garages to be relatives of main householders, increasing the amount of floor space for such buildings, lowering the lot size for which planning approval for single houses is required and placing greater emphasis on local development plans.