The Real Estate Institute of Western Australia is concerned that today's suspension of the Keystart Shared Equity Program for first home buyers will impact on both the established market and new housing sector.
REIWA President Rob Druitt said there is evidence of an increase in the numbers of first home buyers building a house.
"This is important because it provides new entry level housing stock for future resale, something that has been very limited in recent years," Mr Druitt said.
"The suspension of the scheme is a blow to potential first home buyers and to the market in general, but it's really been a victim of its own success."
Mr Druitt said it was understandable that the scheme was oversubscribed quickly as eligible first home buyers rushed to this affordable entry point into home ownership.
"The scheme is rightly targeted at low income earners needing affordable housing, but I think the previous government underestimated the demand for this due to the rapid rise in Perth property prices over the last few years.
"The incoming Barnett Government will need to either expand the scheme with more funds or look to alternative strategies to help with affordability for first home buyers," Mr Druitt said.
Mr Druitt said affordable housing was most problematic in many of the state's regions, including the Pilbara and Kimberly where prices had skyrocketed on the back of the resources boom.
"Premier Barnett and Mr Grylls may want to look at using some of the funds from 'Royalties to the Regions' to help out first home buyers in places like Broome, Karratha, Newman and Port Hedland.
"This in turn would mean there are more Shared Equity funds available for metropolitan buyers," Mr Druitt said.
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