In a measure set to underpin further demand for new housing construction, beefed-up incentives for first home buyers to purchase newly built homes are now in effect throughout Western Australia.

Following passing of legislation to amend the First Home Owner Grant Act 2000 last week, changes which came into effect on Wednesday will see the amount of money first home buyers receive for the purchase of newly constructed homes under the First Home Owner Grant scheme increased from $7,000 to $10,000.

The amount of money available under the grant for the purchase of existing homes, meanwhile, will fall from $7,000 to $3,000.

While largely a budget-saving measure, the changes aim to boost residential construction activity by encouraging first home buyers to purchase new homes as opposed to existing homes, and are part of broader government efforts to boost residential construction to levels sufficient to meet the state’s long-term housing requirements.

The changes follow an overhaul of planning arrangements designed to unlock housing supply by, among other things, easing restrictions on both the size of ‘granny flats’ and who can occupy them, lowering the lot size for which planning approval for single houses is required and placing greater emphasis on local development plans which came into effect last month.

Further reforms designed to streamline planning approval processes, meanwhile, were released for public comment last week.

While often disliked by real-estate groups, measures to provide incentives for first home buyers to purchase new – as opposed to existing – homes are generally popular with building industry groups, who say such arrangements provide a strong boost to new housing supply and the residential construction industry.

The changes follow moves along similar lines in some other states. Queensland, for example, last year withdrew its first home owner grant for existing homes entirely but more than doubled that available for newly constructed homes from $7,000 to $15,000.

State Treasurer Troy Buswell said the changes will help better align incentives on offer with the state’s long term housing policy objectives.

He estimated that around 8,000 first home buyers will switch from buying established homes to purchasing new homes in response to the moves.

“These important changes not only reflect sound policy to increase our overall housing supply, but the decision will also help create jobs in the housing sector,” Buswell said.

“Increasing the grant for new homes will provide first home buyers with greater incentive to buy or build a new dwelling rather than purchase an established home. This will help alleviate the pressure placed on the existing housing stock by the State’s high population growth and drive jobs growth.”

The latest changes do not affect existing exemptions regarding transfer duty on either new or established homes for first home buyers.